How to Apply for Credit Card
Credit Card Meaning
In this generation where carrying heavy cash is very risky and cumbersome too, credit card comes as a boon and is extensively used due to its convenience and safety. Credit card also known as plastic money is the plastic card which gives the authorization to the buyers to purchase goods by borrowing money from the financial institution within the given eligible limit (credit limit).
Features
Features may vary from one credit card to another, but there are few common features applicable to all credit cards. They are mentioned below.
Credit Limit
The maximum amount that the cardholder will be allowed to borrow will be as per the permitted credit limit,which is based on income earned, past credit history, etc. of the applicant.
Interest Rate
An interest rate ischarged on overdue balance.The interest rate can be anywhere from 0% to 79 %. Also a late payment fee is levied if the minimum amount as mentioned on the bill is not paid.
Time Limit
The borrower gets credit for 20 to 50 days depending on the date of the bill and not on the date of purchase of goods/service.The due amount has to be paid by the mentioneddue date and if the amount is not paid within the given date, a grace period of few more days is granted after which interest is levied.
Incentives
The credit card holders will be given incentives depending upon the type of credit card they are using.
Parties involved in Credit Card Transactions
The following are the parties involved in credit card transactions:
- Card holder or applicant
- Bank issuing credit card
- Merchant – the individual or company accepting payments made through credit card for products and services.
- Acquiring bank - The bank that processes all transactions between the cardholder, merchant and the issuer.
Advantages
The following points explain the advantages of credit card that the customer enjoys:
- It increases the flexibility as there is no necessity of carrying more cash in hand for purchasing.
- The mode of purchase becomes easier with credit card and shopping simpler as it can be done through online or even phone.
- Credit card also gives additional benefits such as incentives to the card holder such as discount on holidays, cash back offer or insurance cover for purchases made.
- It is convenient for borrowing for a short period of time, as the interest is charged only on the unpaid amount of the cardholder and any subsequent purchases.
Disadvantages:
The following points highlight the disadvantages of credit cards:
- The interest rates are very high and subject to change
- Merchants accepting credit cards are required to pay a processing fee to the acquirer on transactions of card.In some cases they pass the charges to the customer due to the agreement made between the parties. Thus the customer has to pay an additional charge over and above the cost of purchases.
- Cards can be stolen or misused when neglected.
Types of credit card
Some popular credit card types that are available are as follows:
Gold Credit Cards, Silver Credit Cards, Low Interest Credit Cards, Business Credit Cards, Balance Transfer Credit Cards, Cash Back Credit Cards andPremium Credit Cards
How to apply for credit card?
Credit cards are issued by banks and each bank offers different types of credit cards. The customer can choose the card according to their requirements. The card is issued for a period of one to three years.
Procedure for applying for credit card:
- Choose the card that you wish to apply
- A duly completed application form along with a photograph has to be submitted.
- You have to provide the following identification documentations for proof and verification:
1. Proof of income
2. Statement copy of bank (previous 6 months). - You can send the documents through an agent or can even courier to the given address.
- The company would verify the details given by you.
- If all the details after verification are found in order, the company would send the credit card in 3 to 4 weeks starting from the day the applicationhas been sent.
- It would issue the credit card and send it by courier to the mentioned correspondence address. The courier has strict instructions to hand over the card only to the applicant of the card. The company also provides details about the credit limit.
- It is important to sign at the back of the credit card. It serves the purpose of authentication on the spot when the card is stolen or lost.
Reasons for Application Rejection
There are reasons for which your application for credit card can get rejected. The reasons may be any of these:
- You have failed to clear the past loans or any payments in the bank.
- The income criteria mentioned by bank is not fulfilled.
- If the applicant is not reachable when the representative from company tries to contact for verification process.
Credit Card Receiving Procedure
The procedure of getting credit card can be done in 3 ways: it can be done through:
- Bank (in Person)
- Internet
Payment Procedure
Credit card payments can be done in 2 ways:
- Online payment
- In bank
Banks offering Credit Cards
Some of the banks offering credit cards are:
- Citibank
- HDFC Bank
- ICICI Bank
- Standard Chartered Bank
- SBI
It is important to remember that having credit card is not the necessity of life, it is only convenient mode of payment of money and the most important thing is, the credit cards have to be used sensibly.
Contributed By: Aruna Sharma |
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Mrs. Sharma holds a Masters in Financial Management from University of Mumbai. She has graduated from the University of Mumbai. | |
i wanted to know that how much amount of Balance per months income is required for issueing credit card...??
which bank can give me best service?
what is the prcedure?
my inhand salry is 16500.