A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

1. What is a Credit Card, Charge Card or Debit Card?

A Credit Card, as its name suggests, gives you credit, for a charge, of course, and allows you to pay for service or product over a period of time. The days of credit one gets could range from 20 to 50 days (calculated from the day of billing and not from date of purchase) come interest free. You can choose to pay your dues entirely at one go or stagger them after paying the minimum amount due every month. A Charge Card is almost similar to a Credit Card, but with one key difference. With Charge Card, you have to pay the entire dues within the credit period and also you cannot carry over any balances like a Credit Card. A Debit Card is on the whole, an ATM card on the move. It enables you to access your bank deposits for payment. When you make any purchases using a Debit Card, your bank account is instantaneously and automatically depleted to the extent of the purchase amount.

2. How many types of cards can I choose from in India?

In India there are essentially three types of cards available, Visa, Master Card and Amex (American Express).

3. What is Gold, Silver or Classic/Executive Card?

Gold, Silver or Classic/Executive are the terms used by issuing banks to distinguish between the levels of services offered on each. The Gold Cards fall on the premium segment as they feature better features like higher insurance covers, more privileges, more facilities, more discounts. These types of cards have the element of prestige and esteem associated with them. And they don't come any cheaper, as they have the highest fees and service charges.

4. What is the process for owning a Credit Card?

First get in touch with the card issuing bank. Ask for the application form. Fill-up the form and submit it along with the necessary documents required. After a short credit appraisal, the bank will send you your card by mail.

5. What are the eligibility norms to get a credit card?

Credit Card companies/ issuing banks do have a minimum income level requirement which serve as the preliminary point while apply for credit card. The income requirement varies from bank to bank, ranging between Rs.60,000 to Rs.2 lac per annul, depending upon your choice on the type of card you want and also upon your risk profile. If you have a regular and steady income source, it helps, as the banks issuing Credit Cards need to be sure whether or not you will be able to repay the expenses incurred through your credit card. You have to be at least 21 years of age and not more than 65 years.

6. How can I increase the loan amount?

You can increase the loan amount by clubbing your income with your spouse / son / father etc.. In that case he/she will be the co-applicant for your loan.

7. What is the minimum salary criterion?

A minimum salary criterion differs on the type of card you are applying for. You need a salary of at least Rs.70 to 75,000 per annum for ordinary cards and for a Gold card, up to Rs.1 lac 80,000 per annum.

8. How much does it cost to own a credit card?

The basic cost involved in applying for a card comprises the joining fee, which varies from bank to bank and on the type of card you have applied for. Joining fees (a one time payment) vary from Rs.100 to Rs.1000. Every year you will be charged an annual fee to continue your membership on the card. Annual fees vary from Rs.400 to Rs.2000 The annual fee are payable in advance (at the beginning of the year) You do not need to pay cash for the annual fees as the issuing banks automatically bill these to your credit card in the first monthly billing statement, and hereafter, every year.

9. Are there advantages in paying through a Credit Card even if I have cash I can spare?

Depends on how you look at it. With a Credit Card, you can delay payment of the bill by up to 50 days. Also, most card issuers give you a discount on the next year's annual fees if you make purchases over a certain specified amount on your card.

10. How are the fees levied when I delay my repayments?

It is sensible to pay off at least the minimum amount due on out-standings every month. This is because the late payment fees are very high, around 15% of minimum payment due or 2.5% of the total outstanding balance. Late payment fees are chargeable after the stipulated 'interest-free period'.

11. What is a Global Card?

Global Card enables you to use your Credit Card when you travel overseas. Global cards are accepted in over 200 countries. You can also use it as an ATM card. It also gives you the flexibility of using your card instead of using cash or traveler's checks. You can spend in dollars or any other foreign currency and settle the dues in your local currency. Your credit limit is based on the Basic Travel Quota (BTQ) entitlement. If you are a frequent traveler, abroad, then it is best to make your Credit card, Global.

12. What is PIN?

PIN or the Personal Identification Number is unique to every card and is a combination of numbers. It is basically a 16 digit number with the first 8 digits reserving information about the card issuer and the country and the next 8 digits stores customer information like the category of the membership etc. The PIN serves as a key, which allows you to avail certain services like cash withdrawal from ATM's. This number is very important and must be stored carefully.

13. What happens if I lose my PIN?

If you lose the PIN get in touch with the bank ASAP. The bank will replace your credit card and issue a new PIN. This replacement process comes at a cost and gets billed in your next statement.

14. What is late payment fee?

Late payment fees are payable on the occasion of any delay in repayment of the out-standings on your Credit Card after the predetermined interest-free period. These charges are very high (around 15% of minimum payment due or 2.5% of the total outstanding balance) and card members are well advised to pay off at least the minimum amount due on out-standings every month.

15. How much risk in the event of losing the credit card, am I looking at?

You are protected from settling any expenses on your card the moment you inform the bank, plus your liability will be restricted to Rs.1,000. But you will have to pay for all the purchases deceptively made on your card.

16. What should I do if my credit card is lost or stolen?

17. What does the purchase protection feature of Credit Cards mean?

Purchase protection feature of Credit Card means all items bought from the card are automatically insured from damages or loss due to theft/fire, up to a certain amount. This generally works out to around Rs.40,000 worth of cover.

18. What are Reward Points?

The concept of Credit Card Rewards Points was introduced by Credit Card companies to promote regular usage of their cards by its members. This concept basically rewards you with points for so-and-so amount spent on purchase or services through your card. These points can then be redeemed for gifts or for select product purchases or even for paying the annual fees in some cases..