How to Apply For a Credit Card
Credit-cards

A Credit Card, as the name suggests, is a plastic card that is issued by banks or credit unions to facilitate cash advances. Usually, it is referred to as plastic money. It is a very popular mode of payment for purchasing products at the stores or on the internet. Gone are the days when people used to carry cash while going out for shopping.

Usage of credit cards:

A Credit Card is a convenient method to obtain small term loans from any of the banks. Once a bank issues you a credit card after all the verification processes, you can use it use it for withdrawing money or for buying products or services.

When the card holder produces the card at the counter of any shop, he signs a receipt in which the total amount of his purchase is mentioned. With the help of electronic verification (POS SYSTEM), the stores are able to access payment from the customers.

Nowadays, merchant (a person who accepts the card for the service provided by him) is accepting verbal authorization over the telephone and internet. It is known as card not present transaction (CNP). The customer’s bank will then transfer the amount to the merchant’s account. There is a grace period given by the bank to the customer for paying back the due amount. It is usually around 25 to 28 days from the billing date.

Every month, the bank sends a statement to the card holder, mentioning the purchase date and the amount to be paid in that billing cycle. The card holder has a choice to pay minimum amount on the due date. On the next month, reduced balance along with the interest will be added in the statement. In case of default or nonpayment, the bank can charge you with late payments along with the interest. Most of the banks charge you 2 and 3% of interest on your outstanding balance.

Types of Credit Card:

There are various card presented by the issuers. It varies as per the privileges it provides to the card holders. Some of the commonly used credit cards are as follows:

  • Gold credit card: Higher credit and cash withdrawal limit, along with extra privileges.

  • Platinum or Titanium credit card: Similar privileges as Gold credit card. No yearly fee and a protection against online fraud transactions.

  • Silver credit card: Standard credit card, medium cash advance limit, interest rate is zero for 6 to 9 months.

  • Business credit card: Easy means of payments for business transactions of any scale.

  • Reward credit cards: Offers you rewards or bonus points while purchasing, travelling and filling petrol. Basically, it works as a marketing tool for reputed companies or superstores.

  • Standard credit card: Credit is available for use and when repaid it is again made available for the users.

  • Prepaid card: Credit money is already paid in advance, very useful for students who stay away from home.

Choosing of credit card:

To choose from various options offered by the issuers is very mind mingling job. One has to select according to his needs and usage. There are some points that need to be considered before choosing the card and they are as follows:

  • Cards with lower rate of interest will be profitable.

  • Longer grace periods are quite flexible.

  • Check for the extra fees included like annual fee, extra payments while doing transactions online and others.

  • Understand how the minimum payment each month due is calculated and the interest charged on the outstanding balance.

  • Confirm what credit limit has been allotted to you, so that you do not exceed it.

You could apply for a credit card by walking into your bank or over the internet. However, the latter option is more preferable, as it saves lot of time and is very convenient. By applying for a card online, you get an advantage of thoroughly going through the terms and conditions, comparing the interest rates and checking out other benefits.

Besides, you could apply for it at anytime during the day, and you need not take time out of your busy schedule to visit the bank in person. You will also come to know when your application gets approved.

Steps Involved In Applying For Credit Card:

  • Before applying for a credit card, you will need to make sure that your credit scores are above the required mark. This is the primary requisite with any credit card provider, and your application approval will mainly depend on your credit score.

  • Fill in accurate information while applying for a credit card. You will need to provide personal information like your complete name, date of birth, physical address, e-mail address, employment details, and other information. Credit card companies will verify all the information that you provide while applying for a card with them.

  • You’ll also need to provide some of the documents to the issuer like latest salary slip, IT copy or form 16, address proof, identity proof, etc.

  • For company credit cards you will need to provide latest balance sheet, profit or loss balance accounts, and company registration documents for verification purposes.

Benefits of using a credit card:

There are many advantages for the card users, the issuers and the merchants. A few are as follows:

  • A card holder can do cashless shopping anywhere. It is a very convenient and popular mode of payment for making purchases online.

  • The users will not have to move around with huge amount of cash to buy costly items.

  • The card differs from the debit card, as it offers small term loan to the card holders.

  • Sometimes the bank offers reward points, general coverage, car insurance, accident and death insurance, as extra bonuses for the card users.

  • Sometimes bank provides discounts while booking airline tickets.

  • It gives the merchant a surety of payment unlike checks, as the bank transfers the funds as soon as the transaction is finished.

  • By offering this convenient option to their customers, even the merchants are able to boast their sales.

  • The issuers of the card will charge interest on every transaction after the grace period, which is an earning for them.

  • In some cases, they also take their commissions or percentages of the payments from the merchants, as a fee for processing the transactions.



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