What is Credit Card?
A credit card is a financial tool issued by banks or credit institutions that allows you to borrow money for purchases but only up to a certain limit. Think of it as a flexible short-term loan. You swipe the card, buy what you need, and then pay it back at a later date, usually by the due date.
Understanding what is credit card with example would be easier. Imagine you’re buying a laptop worth ₹50,000. Instead of paying upfront, you use your credit card. The bank pays the seller, and you owe the bank ₹50,000. You can either pay the full amount during the billing cycle or opt for monthly installments.
A few reasons why people love credit cards are:
- Enables emergency purchases when cash is tight
- You get reward points, cashback or travel perks
- It helps you build your credit score if managed responsibly
But hey, use it wisely! Overspending or missing payments can lead to debt and stress. As a cautionary practice, read the fine print to know about the interest rate, billing cycle and repayment terms before splurging.