A 21st Century Financial Blessing: Credit Card

The 21st century is widely known as the technological age. We are in the second decade of the century, but the changes and growth of technology are fascinating. It has affected almost every other field in the world and has made concrete changes in its development. Technological advancements in the financial sector have made many financial tasks easy and accessible. Although online banking and transaction technology was introduced in the 1990s, the 2000s witnessed the dramatic increase in the use of this technology around the world. In the same way, credit cards were introduced in the late 1950s, but their use increased as the world saw more technological advancements in the field. People were very skeptical about the use of these cards and they were mainly used for international travel and to buy heavy and expensive goods. But as banks began offering additional security measures and added benefits in their use since the early 21st century, more and more people are using this type of plastic money.

Credit cards are now considered a blessing. Its easy availability and hassle-free use are changing its status from luxury to necessity. They can be used online or in person, anywhere in the world. They have managed to bring the world closer together and make it accessible in financial terms. Banks around the world offer various types of credit cards depending on the needs, financial background and credit report of their customers. Borrowers are required to provide minimal documentation to obtain a credit card and these cards are approved as quickly as in one day.

Banks offer credit to their customers to buy or pay for their desired products. It is like borrowing money from a bank to pay for goods and repaying it later in one go or in monthly installments, that is, EMI. Banks charge a minimal interest rate and processing fees on these cards. Some banks also charge card renewal fees each year. By having a credit card, you can pay for goods and services even if you do not have sufficient funds in your bank account at the time of the transaction. You only pay the full billing amount later, when you have funds. Paying your card bills on time will dramatically increase your credit score, which will eventually help you down the road if you decide to take a larger loan. Timely payment of credit card bills shows your ability to pay your debts on time and works as an important trust factor when borrowing large amounts of loans from a bank.

As mentioned above, banks offer different types of credit cards depending on the financial profile of the borrower. Banks decide your card credit limit by analyzing your financial history, credit report, current financial obligations, employment status, and ability to pay future credit debt. The credit limit is basically a series of amounts that is considered a spending limit. Each card has its spending amount limit and the borrower is not supposed to exceed that amount. The credit limit changes according to the use of the card. These cards also come with a great structure of reward points, discounts and cash back, etc. Various e-commerce websites, restaurants, shopping malls, and salons enter into agreements with major banks to offer discounts and reward points to their customers when purchasing goods or services from them. This helps them increase their business and their customers by offering them discounts.

All banks that offer credit cards to their customers have created comprehensive security systems to protect the account information of their card users. This card comes with a special magnetic chip on its back, which protects the cardholder’s secret numeric information. Also, if you use such a card to buy goods and services, the money is not quickly deducted from your account. In this way, if someone misuses your card, you can inform the bank to block the card and you will not have to pay for incorrect transactions made on the card.

Having a credit card is a responsibility as well as being a luxury and a necessity. Although these cards are easy to use, care must always be taken not to misuse. You should always pay your card bills on time to avoid late fees charged by banks. Also, you should always maintain your credit utilization ratio. That means you shouldn’t exceed your credit limit on the card. Also, you should not leave it unused. Not using your granted credit can also be detrimental to your credit report. Credit cards can be used to withdraw cash from ATMs just like debit cards. But banks charge transaction fees for ATM withdrawals made with these cards. So unless it is really necessary, you should avoid withdrawing cash from ATMs with these cards. Many people fear that having a credit card will make them shopaholic. But it must be controlled to avoid spending more than you can repay. You should avoid unnecessary and misplaced shopping.

Credit cards have many benefits, such as reward points, cash back offers, and discounts. You should use these benefits in an orderly manner. Find out where you can use these benefits and how they will pay off for you. Don’t forget to check your monthly credit card bill. This will help you keep track of your expenses. It will also help you with your monthly financial planning.

Leave a Reply

Your email address will not be published. Required fields are marked *