Credit Card: The Easy and Emergency Money

by Banking Desk
Credit Card: The Easy and Emergency Money

Since long, people have relied on credit cards to get them through rough patches. A credit card is a plastic, electronic card that allows you to borrow money from the bank with a promise that you’ll pay back the money in due time with the interests acquired with it. This is often called mortgage on credit.

This mortgage is repaid according to the rate of interest charged by the bank. Different banks have different policies available and different types of credit cards as well. They provide different grace periods, safety features and different rewards based on the credit limit and type of card. Since credit is a slippery lane it is often recommended by banks to use credit cards as emergency funds.

This article aims at clarifying all your doubts about credit cards and whether it is suitable for you and if yes, why and if no, then why not.

Topics included in this article will be as follows-

  • Types of credit cards
  • Pros and cons of having a credit card
  • Eligibility criteria for availing a credit card
  • Documents required for availing a credit card
  • What is the rate of interest, how do credit card companies work and understanding the costs associated with a credit card
  • How to use to find the best credit card for you
  • Applying online for a credit card at
  • How to get a credit card by visiting the bank
  • Top banks providing credit cards and different services offered
  • Frequent FAQs on credit cards

Credit Card types

There are hundreds of credit cards starting with the basic with no frills to the premium ones with big rewards and perks attached. Here we discuss some of them.

  • Standard “Plain-Vanilla” Credit Cards – these are offered by banks with relatively easy operations. These types of resit cards come with no rewards. They have a credit limit so that you can avail revolving balance in your card. A minimum payment is to be made every month in this kind of card up to the due date. If the date exceeds, your outstanding balance will be levied on with some finance charge that you’ll have to pay extra with the balance amount of money. The credit in the card is used up when you make a purchase and refilled when you pay your balance on time. Usually, these have an annual fee for the services provided.
  • Balance Transfer Credit Cards – in case you are stuck with a high interest rate existing balance on a card and want to replace it with a low interest card, you should opt this balance transfer card. Usually, banks charge high rates for balance transfer. The advantage with this kind of card are the low interest rates, sometimes 0%. But they often come with requirements of one of two transactions for the service to be made available. Often, those cards that offer low rates and longer periods attract more customers. But to avail such an offer, good credit has to be cashed in proportionately.
  • Reward Credit Cards – these often provide rewards on purchases made. There are usually three kinds of rewards, cashback, point, and travel. People usually opt for cashback options as they secure money instantly. As for points and travel, those with a lot of shopping zeal opt for points redemption and ambitious travelers dig free flights, free hotel stays and other travel perks as their rewards.
  • Student Credit Card – these come with qualifications of being enrolled in a four-year university program to be availed. Student Credit Cards are designed keeping in mind that these customers do not have a credit history. Hence these cards often come with easy balance transfer policies and low-interest rates as well. It is advisable for students to avail of this above all other choices.
  • Charge Cards – these are the kind where you have to pay the complete balance at the end of each month. These do not have any minimum payment or finance charge as you are supposed to pay off the entire balance. To avail of this, the card issuer will require your credit history to see if you can afford this kind of transaction.
  • Secured Credit Cards – these are for those who have a bad credit history and are not eligible for other kinds of credit cards. In order to make the card work, you first have to deposit a minimum-security balance which equals the credit limit on your card. Along with this, you are also supposed to pay the minimum charges every month as well.
  • Subprime Credit Cards – these are the worse kind of credit cards where issuers cunningly search for loopholes to trap the cardholder. These have high-interest rates and fees. These are often used by people who cannot afford any other kind of card.
  • Prepaid Cards – these are often like debit cards because you need to fill up the credit and then make the purchase. It doesn’t affect your credit history or helps to rebuild your credit in any manner whatsoever.
  • Limited Purpose Cards – these are often those issued by grocery stores, gas stations, retail stores, and their kind.
  • Business Credit Cards – these are specially meant for people who wish to keep their business transactions separate from their personal transactions.

Pros and cons of a credit card


  • You can make large purchases and pay off in small amounts over time. This can take off a huge burden in terms of finance and opens up opportunities for the cardholder.
  • It is easier to carry credit cards than carrying hard cash all around.
  • Using a credit card can help you build a credit history that is used by employers or even potential sellers to outline whether you are responsible or not.
  • The rewards earned often get back at least some money of the amount you spend. This might not be possible while using cash.
  • Interest-free credit is offered by a credit card unlike a loan, EMI installments and other such options.


  • Irresponsible spending can land you in large debts which amount to a huge sum with the highest rate of interest charged for them.
  • The ease of using a credit card can often lead to irresistible spending if not done in proportion. Often, it leads to maxing out on a credit card.
  • Maxing outcomes as a bad history which can lead to cancellation of your card until payment of the existing balance is done. Sometimes issuers also block further purchases through the card in cases of max out.

Eligibility criteria for availing a credit card

Different kinds of cards have different eligibility criteria. In cases of most credit cards, other than a student card, the factors often include age, annual salary, nationality, and others discussed below.

  • Age – usually banks have a minimum age limit of 18 years or some have 21 years as minimum age and often 65 years as maximum age to be eligible for a credit card.
  • Minimum annual salary – this factor has a lot of other factors dependent on it. For example, if you have already been a previous customer of the bank, you have a lesser income to qualify for getting a credit card, say 25k. So minimum income requirement alters with your relationship with the bank. Also, age is a factor as well. For those who are young and just started, for example, 21 have a minimum income limit as 25k or 50k and those with older age have higher limits with 200k i.e. 2 lakh or more.
  • Nationality – some banks provide credit cards to their country’s citizens only or NRIs as well. If some bank is providing a credit card to foreigners also, the regulations for them are different from the citizens of the country. Also, credible proof of identity is required as well.
  • Credit Score – at the time of issuing a credit card, banks often look at the previous credit score i.e. payment history, transactions, and payment defaults to gauge how financially responsible you are.
  • Credit Utilization Ratio – this is the ratio between credit card bill and credit limit. Someone who spends more will have a lower credit utilization ratio. Banks do not want to entertain such a credit hungry customer.
  • Applications – there ought to be a gap of a minimum of 6 months between applying for credit cards or loans. Those who apply for multiple credit cards and loans at the same time are hungry for credit and disliked by banks door the high risk of debt accumulation or defaulting and bankruptcy posed by them.

Documents required for availing a credit card

Necessary documents that should be submitted while applying to get a credit card are –

  • Proof of identity – you should carry all your identification proofs such as your voter ID, license, passport, and any other government-approved Identification proofs.
  • Proof of address – you must attach address proof so the bank people know that you are not faking your identity
  • Proof of income – always carries your latest salary slip and ITR (Income Tax Revenue) slips as well to show for proof of your salary.

What is the rate of interest, how do credit card companies work and understanding the costs associated with a credit card

Credit Card Interest Rates also known as finance charges are those levied on any outstanding amount that you have unpaid on your card. If you pay your balances on time, you do not have to incur any interest. But if you withdraw from ATM using a credit card or have not paid the outstanding balance in time, the bank then charges interest on this amount. Additionally, any other purchases that you make in the next billing cycle won’t be interest-free until you repay your balance amount. For different types of credit cards, the interest rates and minimum payment amounts vary. Mostly, the interest rates are set by banks on their discretion, mainly to attract customers while analyzing the present market scenario as well. The interest rates can vary from 2.5% to 3.5% per month.

Credit card companies make money through three ways – transaction fees that they charge the merchant on every transaction you make, interest payments that you’ll have to pay for any outstanding balance on your card and other fees like annual charge, late fees, etc. Usually, if you are sure to pay your balances and minimum payments in time then you need not worry about any interest slapping and in addition, can enjoy rewards. Often the cards with rewards charge higher rates of interest. With rewards come higher risks of losing credit score on non- payment of the balance.

Costs associated with a credit card can be-

  • APR for any unpaid balance in a billing cycle, for balance transfers, for advance cash, for a penalty – annual percentage rate(APR) is decided by banks based on your credit score and present market scenario.
  • Annual fees and minimum balance are required by banks to stay alert on your radar for the services they provide
  • Transaction fees such as balance transfer, foreign transaction fees are the rates charged by the bank in cases of transfer of balance from a high-interest card to one with lower interest rates.

How to use to choose the best credit card for you

Being a rookie you first need to research all the credit card types on the website. Different credit cards have different obligations, penalty periods, credit card limits, interest rates and perks to provide. To choose the best one for you, plan in steps.

  • First, you must compare the types to weigh out the pros and cons effectively as choosing what suits you – a fuel credit card, a co-branded credit card or a lifetime free credit card. Search with the top credit cards by top banks and relate them to your purchasing habits, budget, and lifestyle. can help you search for the best, least risk credit card to suit your needs.
  • Then, you need to check for eligibility based on previous credit score and defaults and penalties if any.
  • Draft an application with the necessary documents to get instant e-approval for your credit card.

Applying online for a credit card at

It is easier to opt online than go to a bank and physically and complete the procedures. The steps to procuring online approval are-

  • Visit the web portal, search for the credit card you want and apply through the online application by filling some details in the form such as name, contact number, email ID, income, address, etc.
  • An associate from the bank will contact you using the details you mention in the form. He will help you to proofread the process by explaining all guidelines and process technicalities.
  • An executive from the bank will soon arrive at your doorstep to collect the documents from you and pursue all further obligations.

How to apply for credit card offline through banks

For those of you are uncomfortable with online processes and prefer to walk up to the bank, the steps are as follows-

  • Visit the bank branch nearest to you and enquire about the different credit cards
  • The bank employees will cater to your needs the ken of different cards that match your requirements.
  • Choose the card that fits you best and fill out the application form with the eligible documents required for KYC activity
  • You will also be needed to provide some photographs and photocopies so you should be well prepared with two copies of everything in hand.

Top banks providing credit cards and different services offered

The top credit cards and services associated with them, according to the best survey are-

  • HSBC Visa Platinum Credit Card – offers 10% cashback upto Rs.2000 on spending Rs.10,000 in 90 days of issuing the card
  • HDFC Bank Regalia Credit Card – rewards such as complimentary priority pass and Taj Epicure membership
  • The American Express Membership Rewards Credit Card – on transactions amounting 1000 get reward membership points
  • SBI Card Prime – welcome reward of a 3000- gift voucher redeemable at Marks and Spencer

Frequent FAQs on Credit Cards

Q. How to get a credit card if I have no prior credit history?

Ans. You can go for a secured credit card wherein you have low-interest rates and low APR with minimum obligations to fulfill before applying for a secured credit card.

Q. How is a credit card different from a debit card?

Ans. A credit card allows borrowing money from a credit card company in exchange for a promise to pay balances on time or else face penalty with interest rates on outstanding amounts. A debit card is directly associated with the bank account and withdraws from it. Usually, credit cards are not associated with one bank account. Credit cards help to build your credit score while debit cards do not allow that.

Q. What is a CVV number?

Ans. CVV stands for Card Verification Value and is necessary to validate authenticity, especially during online transactions.

Q. What is the minimum age to be eligible for a credit card?

Ans. Usually, banks set the age limits according to their discretion. So, 18 or 21 years is the age for most banks to apply for a credit card.

Q. Why does APR increase when payments are made on time?

Ans. This usually happens with a decrease in the credit score or the end of the card promotion period.

Q. Is it better to use a credit card or debit card while shopping?

Ans. The purchase protection on credit cards is greater than that on debit cards. Since credit cards come with rewards hence you can be assured to get the cashback instantly and see it reflected in your account which is unlike the case with debit cards. Hence credit is more beneficial for shopping.

Q. How can I lower the interest rates on my credit card?

Ans. Usually, good credit history and relations with the bank can influence the representative enough to give you a lower interest rate. Also, you must be on the lookout for a zero balance transfer with low APR rates.

Q. How many credit cards should I own to build a good credit score?

Ans. There is no such one number. You should start with one or two cards at first and always remember to never accumulate any debt or defaults on your payment. These defaults adversely affect your credit score. Keep the cards so that you can manage the schedules of payment. Also, adhere to a high credit utilization ratio to be in the good books.

Q. What are reward points and how to use them?

Ans. Whenever you make a purchase, you earn reward points. The rate of accumulation varies from one product to another. These can be exchanged for free items or discounts.


This article contains all the information required to ramp up the knowledge for your credit card and choose the best by employing the services of and gain a better credit score to make smart financial decisions.

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