What is Credit Card | AU Small Finance Bank
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What is Credit Card - Functioning, Features, Benefits & Offers

    Credit Card has become an indispensable part of our lives. Apart from the convenience factor, credit card has attractive offers, deals and discounts often unmatched by any other financial product.

     

    What is a Credit Card?

    A Credit Card is a thin rectangular piece of Card issued by a bank or financial institution that allows you to borrow funds/credit with which you pay for goods and services at a physical or online store. It is a kind of loan. Any individual who owns the Card is assigned a pre-defined credit limit.

     

    Credit Card Features and Benefits

    As a Credit Cardholder, you get to explore a range of Credit Card Features

    • Exciting cashback benefits across brands and products/services
    • Comprehensive insurance cover on Credit Card
    • Welcome and milestone benefits in the form of vouchers, bonus points, etc
    • Instant access to funds and the best alternative to cash
    • Withdraw cash whenever the need arises
    • Accelerated reward points on every transaction
    • Accepted worldwide as the most common mode of payment
    • Improves credit score
    • Ideal financial option to cover the cost of emergencies
    • Credit charges free period
     

    How Credit Card Works?

    When a lender issues a Credit Card, it comes with a credit limit. A credit limit determines your spending capacity. In case cardholders don’t pay the charges with prescribed limit, an interest charge is levied which impacts the Bureau score and future borrwings. Whatever you purchase using the Card is basis the pre-set credit limit.

    Credit Card statement is generated every 30 days depending on the statement cycle the cardholder falls in. Cardholders need to pay the outstanding amount within the timeframe to avoid interest and other charges getting levied.

     

    What is Credit Score and Credit History?

    A credit score is a 3-digit number that ranges from 300 to 900. The credit bureaus calculate it, and each bureau follows its own algorithm to estimate the credit score. It is computed after considering your credit history, credit age, credit utilization and type. Credit history is one of the important factors that affect your score. If you are paying your Credit Card bills or any other loan liability responsibly, it means you are a responsible borrower. A good credit history helps in getting preferential rates on loans and quicker loan sanctions.

     

    Credit Card Interest Rate Formula & Calculations

    (Number of days, from the date of purchase till payment is made) x (Full Outstanding Amount) x (Interest rate percentage p.a./365)

    Case 1: In case you skip paying the credit card bill, then the card issuer will levy finance charges on the entire amount due as well as on the new transactions done in the current month.

    Case 2: The interest will be charged on the remaining amount as well as the new transactions till the previous bill is paid

    Case 3: In case you pay less than the Minimum Amount Due on your Credit Card, the entire outstanding amount will attract finance charges along with the new transactions.

    Case 4: If you withdraw cash using the Credit Card, hence this will attract withdrawal and interest charges.

     

    Credit Card vs Debit Card

    • A Debit Card is issued by your bank with Savings Account. On the other hand, a Credit Card is a kind of loan that you need to apply for, and it comes with a pre-set credit limit.
    • Once you withdraw money from Debit Card, it gets deducted from the linked Savings Account. Credit Card provides cash withdrawal facility with withdrawal fees.
    • A Debit Card bears no interest. For a Credit Card, you would incur interest and other charges if there is delay in payment of outstanding balance.
    • Credit Card gives you access to cashback, reward points and discounts. Some Debit Cards, nowadays, also provide such perks on purchases through offline or online mode.
     

    How to apply for Credit Card?

    When you plan to apply for Credit Card, you should compare the features, benefits, fees and latest offers available on the Card. Apply for the Best Credit Cards with AU Small Finance Bank as we offer different types of Credit Card an amazing array of benefits with our Altura, Altura Plus, Vetta and Zenith Credit Cards.

     

    Best Offers on Credit Card

    If you are looking to unlock the best Credit Card offers, apply for AU Credit Cards. Avail exciting discounts, deals and offers from brands across categories like travel, healthcare, food, etc.


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