How Credit Cards Work?
This is an interesting question. When I was applying for my first credit card, I remember asking my father how credit cards work? He told me that credit cards are a good financial tool to build up your creditworthiness. But he warned me that they could be equally damaging if I didn’t use it judiciously.
Basically when you apply for a credit card, the banks or financial institutions allow you to borrow money from them. You are allowed to spend that money till a predetermined limit. You are supposed to pay this back on the set date. If you fail to pay it in due time, they levy interest which may be quite high.
Mind you, having a credit card is actually helpful especially when you want to make transactions or purchases without cash. They are a good tool to cover up your expenditures in an emergency and offer many benefits. With the right usage and timely repayments, you build your creditworthiness, which helps in getting faster loan approvals.
The concept of credit cards and how credit cards work in India is quite interesting, I hope my insights prove helpful for you.