Cashless payments have been rising in India nowadays. Of the various options available, Credit Cards are the preferred choice among the urban youth. Consequently, many may not know how to use these cards for purchases. However, it is also essential to know the various terms related to it. In this guide, let us learn the top terminologies that you should know about Credit Cards:
Annual percentage rates
If you are wondering what Credit Card interest rates are, APR is the annual interest rate charged by banks or Credit Card companies on the unpaid balances on your card. It is the interest rate that applies when you swipe Credit Cards or make an online transaction when you have not cleared your Credit Card bill by the due date.
Credit limits
Credit limits are the total credit line or spending limit provided to you by the issuer of your Credit Card. That is, it is the maximum amount you can spend using your Credit Card to make online purchases and payments online and offline.
Billing cycles
It is the time between the closing of the previous and the next statement dates. Usually, banks have a 30-day billing cycle. Remembering the dates lets you plan your finances and expenses accordingly.
Annual fees
The issuer of your Credit Card might charge a fee once a year for the services they provide. This may vary from a few hundred up to a few thousand. For some Credit Cards, you need not pay the fees for the first year.
Due dates
It is the fixed date every month when you need to pay all outstanding payments, including EMIs, to the bank. It is best to settle your Credit Card bill before or on the due date. This is because late payments can attract very high-interest rates. Besides, if you do not pay your entire bill, the remaining amount attracts interest. Also, any new payments or purchases on your Credit Card get added to the bill and attract interest unless you settle the entire bill.
However, if you cannot pay your entire Credit Card bill in one go, you can split it into smaller equated monthly instalments. Converting your Credit Card bill into EMIs reduces your financial burden. It also lets you repay your outstanding credit dues at a lower interest rate than regular rates. To find the EMI amount, you can conveniently use an online Credit Card EMI calculator.
Grace period
It is the time between the date of issue of your Credit Card statement and the payment due date.
Conclusion
Knowing the key terms related to Credit Cards is crucial when you want to make the most of the benefits of your Credit Card. You can easily refer to the mentioned terms to make informed decisions.
