CREDIT CARD

A Credit card is a financial tool that allows users to borrow funds from a card issuer within a set credit limit to make purchases, pay bills, or withdraw cash. The borrowed amount must be repaid, often with interest, if not settled within the grace period.

Category of Credit Card

Rewards Cards: Offer cashback, points, or miles for purchases.
Travel Cards: Focus on travel perks, such as free miles, airport lounge access.
Secured Cards: Require a security deposit and are ideal for building credit.
Business Cards: Designed for small businesses with expense tracking features.
Student Cards: Catered to students with lower limits and educational perks.
Premium Cards: Offer luxury benefits like concierge services and higher limits.

Features

Credit Limit: Maximum amount a user can borrow.
Interest Rates (APR): Charged on unpaid balances.
Rewards Programs: Cashback, points, or miles for spending.
Billing Cycle: Monthly duration for transactions and payments.
Grace Period: Time to repay without interest charges.
Additional Perks: Travel insurance, extended warranties, purchase protection.

Eligibility Criteria

Age: Typically 18 years or older.
Income: Proof of steady income or employment.
Credit Score: A good score is preferred but varies by card type.
Residency: Must be a resident of the issuing country.
Documentation: ID proof, income proof, and address verification.

Benefits

Convenience: Easy and cashless transactions.
Rewards: Earn cashback, points, or miles.
Credit Building: Helps establish and improve credit scores.
Purchase Protection: Insurance for theft or damage of items bought.
Emergency Access: Availability of funds in urgent situations.
Travel Benefits: Airport lounge access, foreign transaction ease.

Risks

Debt Accumulation: Overspending may lead to unmanageable debt.
High-Interest Rates: Can increase costs if balances are unpaid.
Credit Score Impact: Late payments harm creditworthiness.
Fraud and Theft: Risk of unauthorized transactions.
Hidden Fees: Annual fees, late fees, and foreign transaction charges.
Over-reliance: Can lead to poor financial discipline.