Credit card - FAQ 1

This article answer some frequently asked questions here from “credit card – what ?” to “What to check before applying for a credit card?”. If you have got other questions you want answered why not ask our expert.

What is a credit card?
A credit card is a card used to pay for products and services at over 20 million locations around the world. All you need to do is produce the card and sign a charge slip to pay for your purchases. The institution, which issued the card to you, makes the payment to the outlet on your behalf and would be reimbursed at a later date by you.
Why should I own a credit card?
Credit cards are relatively safer than carrying cash. You can spend almost anywhere, any time. Credit cards enable you to other benefits like rewards and insurance cover. You also get interest free money for up to 50 days.
What are the eligibility requirements to get your own credit card?
To apply for a credit card, you need to generally: - To be at least 21 years of age and not more than 65 years. - A regular and steady source of income. - Credit card companies (or issuing banks, as they are known) have a requirement of a minimum income level, which serves as the starting point while applying for a card. This requirement varies from bank to bank and could vary between Rs 75,000 per annum to Rs 150,000 per annum depending upon your risk profile and the type of card you choose. Typically, banks issuing credit cards need to be sure whether or not you will be able to repay the expenses incurred through your credit card.
What types of credit cards are there?
There are three cards, which are available, Visa, Master Card and Amex. Various participating banks like ICICI bank or HDFC then issue these cards to end-users. Visa and Master Card are the most popular cards in India and have an almost equal market share. Amex is much smaller in India and is issued through few banks at this stage.
What is the minimum salary required for taking a credit card?
You will need a salary of at least Rs. 75,000 per annum for an ordinary card and Rs. 1,50,000 per annum for a gold card.
What are MasterCard and Visa ?
MasterCard and Visa are global organisations dedicated to promote the growth of the card business across the world. They have built a vast network of merchant establishments so that customers world-wide may use their respective credit cards to make various purchases.
What is a Global Card?
A Global Card enables you to use your credit card when you are overseas. You can spend in dollars or any other foreign currency and settle the dues in your local currency.
What should I do if my credit card is lost or stolen?
In the event of losing your credit card, you must inform the bank immediately. The bank then deactivates your card to prevent any fraud. You are protected from settling any expenses on your card the moment you inform the bank.
What is my liability when I lose my credit card?
Before you report the loss of your card, you will have to pay for all the purchases fraudulently made on your card. The lost card liability fee is payable on the expenses incurred during the period between the loss of your card and your having reported it to the bank. After reporting the loss, your liability is mostly restricted to Rs. 1,000. You may also have to pay for the reporting of the loss in the lost card list. You will be expected to pay for the issue of a replacement card.
Can I use credit cards to make payments on the internet?
Yes, payments over the internet using a credit card is permitted. When you do purchase a product over the internet, you need to be careful about recording details of the order, and reporting any inconsistencies in billing to the card-issuing institution immediately.
Will the merchant charge a service charge for using a credit card?
No. However, with specific transactions like railway bookings they might demand a service charge of 2-3%. Before using a credit card check whether any service charge is applicable. Also, in some countries/states there could be an extra service tax applicable for transactions paid through a credit card.
Do I have to pay interest whenever I borrow?
No. Credit card issuing banks offer you an interest-free period of up to 55 days, after which the payment has to be made on purchases made against your credit card. You have the choice of carry forwarding your out standings by the payment of a ‘minimum due amount’ (generally 5% of the outstanding). If you pay off the entire amount within the interest-free period, then no charges are due. However if you choose to avail of the credit facility, then a credit charge is levied which generally varies between 2.5% to 3%. It should be noted that though the notional interest free period is for 40-55 days, billing is done monthly, so the actual interest free period could vary depending on whether the purchase was made at the start or the end of the billing period.