Credit Card
Credit card is a facility provided by banks and other financial institutions, that allows the holder to make purchases on credit basis. To put it simply, credit card is a way of borrowing money in order to make any sort of purchase. The money you borrow is supposed to be payed back within the grace period, which is usually of 25-30 days. If the borrower fails to pay the amount within the grace period, he/she will be charged interest on the same.
Merits of using a Credit Card
- You can buy anything from a pin to a plane ticket on credit and pay back the amount in smaller amounts.
- You can travel anywhere without cash.
- Using your credit card and repaying the borrowed amount on time helps you build credit score. A good credit history is extremely important while applying for personal loans.
Demerits of using a Credit Card
- If you are not careful about your expenses, you can easily get buried into a large amount of debt.
- The interest charged can make any small debt seem large.
- Due to the increased incidents of frauds and hacking, you can easily fall prey at the hands of fraudsters.
Choosing the right Credit Card
It is paramount to analyze your pay-back ability before you get yourself a credit card. If make on-time payments, you will get various benefits from the banks, such as reward points. You can choose from a wide variety of credit card schemes, but buy a card only after doing a proper research.
