The 21st century is widely known as the technological age. We are in the second decade of the century, but the changes and growth of technology are fascinating. It has touched almost every other field in the world and has made concrete changes in its development. Technological advances in the financial sector have made many financial tasks easy and accessible. Although online banking and transaction technology was introduced in the 1990s, the 2000s saw the drastic increase in the use of this technology around the world. Similarly, credit cards were introduced in the late 1950s, but their use increased as the world saw more technological advances in the field. People were very skeptical in the use of these cards and they were mainly used for international travel and to buy heavy and expensive merchandise. But as banks began to offer additional security measures and additional benefits in its use since the beginning of the 21st century, more and more people are using this type of plastic money.
Credit cards are now considered a blessing. Its easy availability and hassle-free use are changing its status from luxury to necessity. One can use them online or in person, anywhere in the world. They have managed to bring the world closer and make it accessible in financial terms. Banks around the world offer several types of credit cards depending on their customers’ needs, financial history, and credit report. Borrowers must provide the minimum documentation to obtain a credit card and these cards are approved in as little as one day.
Banks offer credit to their customers to buy or pay for their desired products. It is like borrowing money from the bank to pay for goods and paying it later in one go or in monthly installments, ie EMI. Banks charge a minimum interest rate and processing fees on these cards. Some banks also charge card renewal fees each year. By having a credit card, you can pay for goods and services even if you don’t have enough funds in your bank account at the time of the transaction. Simply pay the full billing amount later when you have funds. Paying your card bills on time will dramatically increase your credit score, which will eventually help you in the future if you decide to take out a larger loan. Paying credit card bills on time shows your ability to pay your debts on time and works as an important confidence factor for borrowing large sums of money from a bank.
As mentioned above, banks offer different types of credit cards depending on the financial profile of the borrower. Banks decide your credit card limit by looking at your financial history, credit report, current financial obligations, employment status, and ability to pay future credit debt. The credit limit is basically a number of amounts that is considered as the spending limit. Each card has its amount limit for expenses and the borrower must not exceed that amount. The credit limit changes according to the use of the card. These cards also come with a great structure of reward points, discounts, and cash back, etc. Various e-commerce websites, restaurants, malls, and lounges enter into agreements with major banks to offer discounts and reward points to their customers when purchasing goods or services from them. This helps them increase their business and customers by offering them discounts.
All banks that offer credit cards to their customers have developed complete security systems to protect the information in the accounts of their card users. This card comes with a special magnetic chip on its back, which protects the cardholder’s secret numerical information. Also, if one uses such a card to purchase goods and services, the money is not quickly deducted from their account. That way, if someone misuses your card, you can tell the bank to block the card and you won’t have to pay for improper card transactions.
Having a credit card is a responsibility as well as being a luxury and a necessity. Although these cards are easy to use, one should always be careful not to misuse them. You should always pay your card bills on time to avoid late fees charged by banks. Also, you should always maintain your credit utilization ratio. That means you shouldn’t exceed your credit limit on the card. Also, you should not leave it unused. Not using your given credit can also be detrimental to your credit report. Credit cards can be used to withdraw cash from ATMs just like debit cards. But banks charge transaction fees for ATM withdrawals made with these cards. Therefore, unless it is really necessary, you should avoid withdrawing cash from ATMs with these cards. Many people fear that having a credit card could make them addicted to shopping. But you must control yourself to avoid spending more than you can afford. You should avoid unnecessary and misplaced shopping.
Credit cards come with many benefits like reward points, cash back offers, and discounts. You must use these benefits in an orderly manner. Learn where you can use these benefits and how it will pay off for you. Don’t forget to check your monthly credit card bill. This will help you keep track of your spending. It will also help you with your monthly financial planning.