WHAT IS A CREDIT CARD? SHOULD YOU OWN A CREDIT CARD!

In this article, I will be talking about credit cards whatever the knowledge I have on that matter. So, let's start,

 A credit card is a tool that helps you borrow money from banks to make purchases, transfer balances, and get cash advances, with the agreement you will pay back the money you borrowed. It is a type of debit card but the main difference between a debit card and a credit card is when you use or swipe your debit card for making any kind of purchase, payment, or for anything then the money will be deducted from your bank account but when you swipe your credit card then the money is deducted from your credit card spending limit which is not connected to your bank account. So, if you do not have money to pay for something right now, then you can use your credit card to make this payment. This is a good option, right! because we can use the money that we don't have at almost 0 interest👀, but it doesn't mean you can use 5 cr in a month 😏. There are definitely have some limits, you cannot go beyond that and the limit is determined by the banks or specifically the credit card companies. You might be thinking that why someone is giving us money to use almost at the free of cost! but this is not true, you always have to keep in mind that in this world nothing is absolutely free you must have to pay for that.

 Some people often think that if they have money, why do they need to use someone else's money( banks) to make their own purchase! first of all, I want to say that credit card companies will issue a credit card to you when they think you have the ability to pay back their money. If they have assured then only you can get your card.  Billionaires also use credit cards even they actually don't need that, right! So there must be some secrets about that! 😕

There are some certain things that you should know about a credit card before owning it, I want to talk about something, just like before owning your own credit card, you must have to be 21 of your age, your monthly income would be at least 20k rupees or more than that and the most important if you are someone who doesn't have the capacity to deal with your emotions properly then a credit card might not for you because it can get you into debt. 

About payment, you have to repay the money within the billing period. Let's assume your billing period is 25 august to 25 Sept, so you will have the time to repay the money you have taken from the bank through your credit card until 15 Oct because the time is around 50 days and this is your interest-free period.

NOW LET'S TALK ABOUT SOME ADVANTAGES & DISADVANTAGES OF CREDIT CARDS...

* DISADVANTAGES: 

1) Credit card companies promote impulse buying because whenever you go into any website then you show an ad and if you are not in a good place mentally then you buy things that you don't need currently, just like you buy shoes, a t-shirt that you don't need or you subscribe multiple platforms( like Netflix, amazon prime, disney+hotstar) or stuff like that and you do that because you don't need to pay right now, you can pay later. So, before owning a credit card you must have to muster your emotional intelligence otherwise credit card might not be your friend😟.

2) It can get you into a lot of debts as I mentioned earlier. Let's see how? You might be aware that home loan interest is around 8%, car loan is around 10%, a personal loan is around 12% but, have you any idea what is the interest rate of a credit card? It is around 40-42% per annum, it depends on bank to bank but in general, it is around 40-42 percent, yes you have heard the right😕, So, if you just delay for 1 day to make payment then you have to pay the interest rate not just for 1 day but from the starting day you made your first transaction, next late payment charges would be applied, then you have to pay 18%  GST on the total transaction you have made and if you make any new transaction before paying your old amount then you wouldn't have any interest free period, you also have to pay for this amount. Apart from these the solid way the credit card companies are making profits is when anyone withdraws cash using a credit card then you have to pay interest from day 1, so never withdraw cash using your credit card. So be swear no matter what but you will pay your bills on time.

3) It can spoil your credit score. You should always try to build your credit score. Your credit score is used by banks, credit card companies, and even insurance agencies, and decide whether or not to offer you a credit card and what is the interest rate would be. Always remember your credit score should never go down but if you don't pay your credit card bills on time then it will😕. You can use the CRED( founder: Kunal shah) application where you can check your credit score and manage your credit cards, if you pay your bills on time then this will reward you😀. 

* ADVANTAGES: 

1) Whenever you pay your credit card bills you get reward points, you get cashback offers, sometimes you get movie tickets, lounge access at the airport( it means whenever your next flight is a delayed that time you get free service like food from the airport) or stuff like that.

2) It will build your credit score, but how! So if you pay your credit card bills on time then over the period of one year it will actually build your credit score and if your credit score is good enough then you can get a lot of benefits just like your good credit score will help you to buy good insurance, you will get more discount on products than others when you will use a credit card for online shopping or stuff like that.

 These are some advantages and disadvantages of using a credit card. So, If you are mentally peaceful, you have control over your emotions, you don't buy silly things for just showing off then credit cards might be your friend. If you pay your bills on time then you can get a lot of benefits.

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