Advantages and Disadvantages of Credit Card | Credit card k fayde or nuksan |Benefits of Credit card

In this video we will learn the advantages and disadvantages of credit cards. Also we will learn benefits of using credit card.It will help us to make the decision that credit card are suitable for you or not.

Link of other important videos

What is Credit card? – https://youtu.be/oGpjsRISMv0
What is KYC ? – https://youtu.be/2nFrM3N4dmo
How to invest in SIP Mutual Fund? - https://youtu.be/hHsKYt4K2no

What is Credit Card?

A credit card comes with a predefined credit limit using which you can make purchases. After every billing cycle (of usually a month), your credit card bill is generated. You are required to pay the total amount due in order to avoid additional charges. However, if you miss the payment or pay only the minimum amount due, then you will incur credit card interest rates and other penal charges. So, as long as you keep making regular payment of your credit card bills, you will be able to make the most of its benefits.

Advantages of Credit Cards

Credit cards, when used with financial discipline, can offer a lot of benefits in terms of ease of use, convenience and luxury privileges. You can expect most of the below-given benefits from a typical credit card.

The choice to pay later –
Credit card allows you to pay off a purchase at a later date. Typically you get up to 50 days of interest-free period. During this time you do not incur interest on any purchase that you made. So, if you time your purchase correctly you can pay off a purchase after receiving your monthly salary, you can ease the burden on your monthly budget.
EMIs –
EMIs allows cardholders to spread out their payment over a few months. Here you can break down a big-ticket purchase into smaller portions which can be spread out to over 12 months or more. For this, you will be charged an interest rate, between 12.5% to 24% p.a. Note some e-retailers and stores also provide a No-cost EMI option where you will not be charged any interest rate.

Security –
Today Credit cards are secured with EMV (Europay, MasterCard, and Visa) chip which secures your card against fraudulent transactions. Banks and payment gateway providers have also boosted their security measures to ensure safety during online transactions.

Credit Score –
Money lenders gauge an applicant’s ability to repay a loan on the basis of their credit score. The score takes into account how much credit you have taken till date, what are your repayment habits and how long have you taken a loan for. A higher score lets the bank know that you can be trusted to repay a loan while a lower score dictates the opposite. Proper usage of credit cards can be really useful in this regard.

Loan on Credit Card –
If you ever require cash urgently then you may apply for loan against credit card. Here, the bank will transfer money against your available cash/credit limit to your bank account. Post approval, you can expect to get the amount transferred within a few minutes.

Rewards and Benefits –
Almost all credit cards provide some form of benefit to their cardholders. These can be in the form of cashback, reward points, airmiles and so on. These can make your purchases rewarding. You can use the reward points to buy merchandise, use the airmiles to book a flight or use cashback to shop even more!
Disadvantages of Credit Cards

Credit cards are a powerful monetary tool but can also lead to a financial disaster if not used properly. Some pitfalls related to credit cards come in the form of:

High Interest Rate –
The interest that is levied on credit card is about 40% p.a. (3.35% p.m.) making it the costliest form of credit. If you happen to withdraw cash using a credit card then you will incur this interest from the day of withdrawal itself along with withdrawal charges, applied on every withdrawal.

Surcharges –
Certain payments when made through a credit card incur a surcharge, additional fee. These surcharges are generally applied on fuel purchases and railway bookings making you pay more than the due amount.

Fraud –
if the fraudulent transaction is made by a third party then the onus of informing the bank lies with the cardholder. In this scenario, one must inform the bank of within 3 days of the said transaction. If the customer fails to inform the bank then he/she will bear liability on the transaction.

You can take a few steps to safeguard yourself against fraudulent transactions by:
• Disabling Foreign transactions on card when it is not required
• Not opening suspicious looking emails/SMS
• Not handing over your credit card
• Not sharing credit card details
• Never sharing your PIN

Fees & Charges –
Credit cards charge a certain amount for all the services they provide. These include an annual fee, foreign transaction mark-up fee and so on. If you are unaware of all the fees and charges associated with your credit card then you may end up paying unnecessarily.
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Видео Advantages and Disadvantages of Credit Card | Credit card k fayde or nuksan |Benefits of Credit card канала Subant Bhaskar