Credit Cards Companies: Compare Terms of Use

What Exactly is a “Credit Card”?

I know the very mention of the name of credit evokes mixed feelings in you and trust me, it is completely natural. The whole thing about Credit Cards is that it basically involves the use of Bank‘s money for all payment purposes by an individual and then the amounts are later paid to the corresponding Bank with an added interest, as specified by the Bank. 

Basically, it is like using someone else’s money to have your expenses paid and keeping your money safe. This gives you an unbound satisfaction of having your money safe and secure. However, the ultimate ‘headache’ arises when you have to pay the money back with an added interest to the people whose funds you have used up.

How Does a Credit Card Work?

Well, for the basics, it is like you can shop for all your desired products even if you don’t have enough hard cash in your wallet. This implies you can buy almost everything available in the stores. And no! It is not some free service that someone is offering you. A credit card functions upon a gentle swipe feature. Once this particular swipe is made, the corresponding Bank/Financial organization has to confirm whether this transaction is possible or not. The confirmation for the same is sent by the Bank/Financial organization. After this, the merchants from the retail stores from which you are shopping deduct the specific amount billed on your purchase.

It is particularly important to know that you as a customer will have to pay a specified amount as interest to the credit card issuing Bank/Financial organization for this “benefit” after the due date of the bill payment is over. Every month, the whole billing is done, and the due date for the payment of the same is mentioned accordingly. This payment needs to be done within the specified deadlines in order to avoid late payment charges or in other words - interest and also to be tagged as a “Good Customer”. One can also choose to pay the full amount before the due date. This has become the most important source of revenue generation for banks, apart from the yearly rental that most of them charge. 

Why do People Prefer Using a Credit Card for Almost Everything?

Today, more and more people are increasingly getting inclined towards credit card-based purchases and shopping. This has pushed the Banks to immensely scale up the issuing of credit cards to all and sundry. The major reason why a large number of people nowadays prefer using a credit card for almost everything is the ease with which one can shop and ‘pay’ for multiple products/services by using a Credit Card. Just one single swipe and your payment will be done and that too even if sufficient money is not available in your bank account!! Apart from this, the regular use of Credit Cards offer some fabulous benefits such as Credit Ratings, Reward Points which provide extra credit, and even discount coupons. Moreover, there is no requirement of any sort of security deposits and some banks even offer comparatively low interest rates for the credit usage. 

The other main reason for the increasing preference for Credit Cards is that you as a consumer can easily refrain from carrying a large amount of hard cash wherever you go. Nowadays, people also opt for a credit card in order to avail the free or discounted flyer miles that they can enjoy due to the regular use of their credit card. All the above-mentioned reasons have contributed in making Credit Card the most favoured payment option by a large number of people today. 

What Importance Does a Credit Card Hold for You?

A credit card is just as important as any id card you carry along with you to justify your identity. Besides justifying your identity, a credit card facilitates you to buy anything in just an instant of a swipe. “No Cash Required” is what makes a credit card must for you. Also, you will be less vulnerable to any kind of gunpoint theft and instead of having to carry and protect a lot of cash, all you will need to do is to make space for a thin credit card in your wallet. Now, carrying a credit card in your wallet is surely more comfortable than carrying fat wads of currency notes all the time. Also, the presence of a credit card quickly simplifies all your shopping and other expenses with the greatest of ease!! 

If you are still wondering about the importance and benefits of owning a credit card, you need to surely think twice!
 

What are the Perks of Having a Credit Card at Your Disposal?

I know the whole concept of credit card sounds too good to be true. Hence, I am listing below all the advantages of having a credit card at your disposal. Now you can be rest assured that when somebody questions you about the perks of having a credit card, you can proudly state these points!

1. Shop Anywhere, Anytime Even With EMI Option

   The best thing about credit cards is that you don’t need hard cash when you are away from home or money conversion when you are in another country. Just a simple swipe will do for almost all transactions. This will keep you at an advantage as you can avoid counting currency wads at the payment counter, or in the former case, you won’t need to stand in line for collecting currency of that particular country. Also, you can use your credit card for any type of buying purpose regardless of the time of the day or night. The icing on the cake is that a Credit Card can also be used to transfer funds.

2. Discount Offers And Great Deals

   Credit cards offer instant credit ratings. Also, the use of credit cards renders a wide variety of discount offers and deals for all your desired products. This is perhaps the best payment option that you can avail. Excited aren’t you?  Just check out the amazing deals and offers listed on the various shopping sites. You will get an idea of how lucrative these offers are when you pay using a credit card.

3. Emergency Situations

   Owning a credit card or having a credit card at your disposal makes room for specific emergency situations wherein cash is more importantly needed. Since the use of credit card does not involve payment of hard cash, you can almost always resort to payment via credit card as the best option anywhere under any emergency circumstance. Cool, isn’t it?

4. Concept Of ‘Pay Later’

   The whole concept of credit card is to facilitate payment at a later period of time. This buys the customer enough time to arrange the required cash to pay to the corresponding person or organization. This is especially favorable in cases when enough cash is not available at hand and still you cannot lose the option of buying your desired product/service. In other words, credit card eliminates the need to ‘drop your plans’ just because you lack the amount of cash required at hand.

5. Gifts And Rewards

   Using a credit card puts you at a specific advantage of earning daily-weekly-monthly-yearly reward points and gift vouchers for every purchase you make. What’s more, you can even win a free trip to exotic locations all over the world. You can even enjoy discounted hotel bookings at your favorite travel destination. Such reward schemes and other similar ‘goodies’ are something you should consider if you are confused whether to own a credit card or not. 

6. No Prepaid Security Deposits

Usage of a credit card implies that you do not need to place any sort of advance security deposit with the corresponding Bank or Financial Organization. This implies that you can shop as long as you want, without spending any amount of money from your side. I know this gives a ‘high’ to the user, but do remember that you will have to pay back to the Bank all those funds you spent on your shopping sprees, at a later point of time. 

What are the Disadvantages You Will Have in Using a Credit Card?

Every particular thing in this world has both positive and the negative aspects. In other words, every coin has two sides to it. And both the aspects or sides should be studied in detail before  zeroing-in on any decision. The same is the case with Credit Cards. As we have already looked at the perks or advantages of owning and using a credit card, we shall now checkout the disadvantages. So what are the disadvantages that you may face due to using a Credit Card?

1. Interest Rates May Be High 

   More often than not, most banks and financial organizations offer credit cards at high interest rates. Failure of payment of the billed amount before the due date from your end can inadvertently lead to highly increased payable amounts, comparatively the double of what you actually paid for the product/services you availed in the market. 

2. You Spend More Money Than You Would Have

   It is often said that a credit card increases the spending power of people. But a credit card also increases their thirst for shopping. Not having to spend any money in cash, gives you unlimited freedom to spend and shop as much as you desire. But ultimately it is someone else’s money you are paying right now for shopping or something else. This develops a very careless attitude in you and you tend to forget that this particular amount along with some added interest will have to be paid later by you from your reserve cash. You getting my point, right?!!

3. Hidden Funds

   Yes indeed! Hidden charges are definitely added on your credit card bill. You might not take note of this but if you observe carefully, a certain amount of money is always deducted from your account for using a credit card. And there is simply nothing you can actually do about it!

4. Debts

   Most of the times it happens that you keep on delaying the payment of your bills. You wouldn’t even realize when  the due date is crossed and another bill with late payment charges is issued to you. Subsequent delay in payment of bills is surely going to end you up in a total mess with more and more debts piling up with each passing month. And it is very difficult to get up once you fall prey to this sort of debt.
    

The Bottom Line

Credit cards are best when you are totally aware of your transactions. You should observe extreme discretionary standards while shopping and also while selecting a credit card for you. You should analyze your shopping habits and your expected usage before finalizing a credit card for yourself. Statistics suggest that around 51.2 percent of people the world over actually benefitted by using credit cards while around 46 percent faced a downhill. As a parting shot, it is highly advisable that you remain a little cautious with the usage of your credit cards, as this will help you to enjoy all the benefits that come with a credit card to the fullest !!