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2 mins Read | 7 Months Ago

What is a Credit Card: Meaning, Benefits, and How To Use It?

Understanding What Is Credit Card And How To Use It Smartly


The number of credit users has increased significantly. While getting a Credit Card has now become easy, not many people know how to make the most of it. This article gives you valuable tips on how to use it smartly.

How do Credit Cards work?

Credit Cards work as convenient financial tools. They provide a predetermined credit limit to the users, allowing them to make purchases up to that amount. Each transaction carried out with a Credit Card basically means borrowing money from the card issuer.

At the end of the billing cycle, users receive a detailed Credit Card statement of their transactions and the amount owed to the issuer. They can pay the full balance or a minimum amount by the due date. However, if the full balance is not paid, a high-interest amount is charged to the customer.

Credit Cards offer various benefits, such as reward points and cashback. Responsible Credit Card usage can help individuals build a positive credit history, which will help them to obtain loans and financial assistance in the future. However, late payments can lead to additional fees, penalties and negative impact on credit scores. 

Types of Credit Cards

To find the best Credit Card in India, consider factors such as rewards, annual fees, interest rates and additional perks. It is important to do research and compare different options to find the card that aligns with your financial goals and lifestyle needs. Credit Cards come in various types, each tailored to different needs and lifestyles. Some of the best Credit Cards include:

1. Rewards Credit Cards:

These cards offer reward points for every purchase, which can be redeemed for cashback, travel miles or merchandise.

2. Cashback Credit Cards:

These cards earn you cashback with every purchase you make. The amount you earn is usually a percentage of each purchase.
3. Travel Credit Cards:

Ideal for frequent travellers, these cards offer travel-related perks such as airport lounge access, air miles and travel insurance.

4. Fuel Credit Cards:

Designed for individuals who frequently travel using their vehicles. Fuel Cards offer cashback or discounts on fuel purchases.

5. Secured Credit Cards:

Secured Cards require a security deposit but can help build or rebuild credit scores. They are suitable for individuals with a limited or poor credit history.

6. Business Credit Cards:

These cards cater to business owners, offering expense-tracking tools, rewards and higher credit limits.

Key features & benefits of Credit Cards

Credit Cards offer a range of features and benefits for different financial needs, making them a valuable tool for managing finances and enhancing purchasing power. Some of these are:

1. Convenience:

Credit Cards offer a convenient payment method for online, in-store and global purchases, eliminating the need for carrying cash.

2. Rewards Programme:

Many Credit Cards have a rewards programme, allowing cardholders to earn points, cashback or miles for every purchase.

3. Instant Funds:

Credit Cards provide access to emergency funds during unforeseen circumstances or financial emergencies.

4. Build Credit History:

Using Credit Cards responsibly can help build a positive credit history, which is essential for obtaining loans and financial opportunities in the future.

5. Purchase Protection:

Credit Cards often offer purchase protection, including extended warranties, price protection and fraud liability coverage.

6. Travel Benefits:

Certain Credit Cards offer travel-related perks, such as airport lounge access, travel insurance and discounts on flights and hotels.

7. Budget Management:

Credit Cards provide a convenient way to track expenses and manage budgets through monthly statements and online account access.

8. Special Offers:

Cardholders may receive special offers, discounts and exclusive deals from partner merchants and retailers.

9. Contactless Payments:

Many Credit Cards now feature contactless payment technology, offering a faster and more secure way to carry out transactions.

Important Credit Card Terms

Credit Limit:

The credit limit denotes the maximum amount a cardholder can borrow on their Credit Card. The card issuer determines it based on the income, credit score and repayment history. Exceeding the credit limit may incur over-limit fees or lead to declined transactions.

Managing your spending within this limit is vital to maintaining a positive credit standing and avoiding additional charges.

Interest Rates:

Interest rates, expressed as Annual Percentage Rates (APR), signify the cost of borrowing money on a Credit Card. They can vary based on the card issuer and may fluctuate due to market conditions and individual creditworthiness. Understanding interest rates is crucial as they affect the total amount owed on the card balance if not paid in full each month. Managing Credit Card balances responsibly can help minimise interest charges and maintain financial stability.

Fees and Charges:

Credit Cards come with various fees and charges, such as annual fees, late payment fees, cash advance fees and foreign transaction fees. These fees can significantly impact the overall cost of using a Credit Card. You can make more informed and cautious choices by being aware of these charges and considering them when budgeting and making financial decisions. This understanding can help you avoid unnecessary expenses and manage your finances more effectively.

Eligibility & documents required for a Credit Card

Eligibility Criteria

Documents Required

Minimum Age: 21 years

Proof of Identity (Aadhaar Card, Passport, PAN Card)

Maximum Age: 60 years

Proof of Address (Utility Bill, Rental Agreement)

Income Proof

Salary Slips, Income Tax Returns

Credit Score

A good credit score of 750 and above

Stable employment

Bank statements

What is a credit card and its meaning?

A Credit Card is a financial instrument that allows you to avail of credit on all your financial transactions. In simple terms, a Credit Card is a debt instrument that allows you to buy things now and pay for it later. All Credit Cards come with a specific credit limit, which is set by the issuer based on your credit score and your eligibility criteria.

How to use Credit Card smartly?

  • Get a higher credit limit

The maximum credit limit sanctioned to the Credit Card users differs from user to user based on their eligibility criteria, and the credit score. When you apply for an online Credit Card, ask the issuer for the highest possible credit limit. Apart from increasing your purchase limit, the higher credit limit will also improve your credit score.

  • Understand the rewards

Most Credit Cards in India come loaded with a host of reward programmes and offers on a certain type of spending. Some high-end cards provide free access to the airport lounges, while others provide additional reward points on purchasing grocery or fuel recharge. Do your research well about the reward point system and use the card strategically, so that you get the best out of the rewards and benefits.

  • Pay your dues diligently

Credit Card companies impose high-interest rates and penalty fees on outstanding dues and late repayments. So, to avoid paying those heavy interest and penalties, make sure that you pay out dues on time. This will also improve your credit ratings.

  • Don’t use a Credit Card to withdraw cash at an ATM

You can use the Credit Card to withdraw cash from the ATM. However, it is advisable that you avoid using this facility unless it is an emergency. ATM withdrawal attracts heavy Credit Card interest rates.

  • Don’t just pay the minimum amount payable

A lot of people have this wrong notion about Credit Card payment that paying the minimum amount is enough. However, the Credit Card issuers charge a hefty interest on the balance amount. So, to avoid paying those charges, you must try to pay the dues in full every month.

  • Check your statement carefully

Apart from paying your bills on time, make sure that you scrutinise your monthly statement and understand what charges are levied in your bill. Also, look if there is any suspicious transaction. This could be because of Credit Card fraud. Never share your Credit Card details with anyone.

  • Use your card only at trusted stores

If you use your Credit Card for online purchase or buying things from a local store, make sure that the retailer is a trusted one. This will minimise the risk of your Credit Card identity theft.

Now, that you know how to use Credit Card smartly, you can apply for a Credit Card online and make the most of it.

Keep an eye on your Credit Card spending

Maintaining a close watch over your expenditure is of utmost importance, especially when it pertains to Credit Cards. These plastic cards can be incredibly convenient but without careful management, they can quickly lead to financial trouble. To help you stay on top of your Credit Card expenses, consider the following pointers:

  1. Set a Budget:

    Establish a monthly budget that includes specific allocations for Credit Card payments. This will give you a clear picture of your financial obligations and prevent overspending.

  2. Track Your Purchases:

    Keep a track of every transaction you make using your Credit Card. Utilise digital tools such as mobile banking apps or personal finance apps, to monitor and categorise your spending.

  3. Be Mindful of Interest Rates:

    Credit Cards often come with high-interest rates. If you carry a balance, the interest charges can accumulate rapidly. Paying off your balance in full each month can save you from unnecessary interest expenses.

  4. Avoid Impulsive Buying:

    Before making a purchase, ask yourself if it is a necessity or an impulsive desire. Consider waiting for a day or two before finalising a non-essential purchase, giving yourself the time to evaluate if it aligns with your financial goals.

  5. Utilise Credit Card Rewards:

    Many Credit Cards offer Rewards Programmes such as cash back or travel points. Take advantage of these benefits by using your Credit Card strategically for purchases you would make anyway but always ensure you can pay off the balance.

By implementing these pointers, you can maintain control over your Credit Card spending and prevent debt from spiralling out of control. Remember, financial responsibility starts with being aware of your spending habits and making informed decisions.


As the number of Credit Card users continue to rise, it is essential to understand how to make the most of this financial tool. This article has provided valuable tips on smart Credit Card usage. By getting a higher credit limit, understanding rewards, paying dues diligently, avoiding cash withdrawals, paying more than the minimum amount, checking statements carefully and using the Card at trusted stores, you can navigate the Credit Card landscape wisely. Maintaining a watchful eye on your spending habits is crucial to prevent financial missteps and ensure a healthy financial future. So, apply for a Credit Card with confidence and use it smartly to optimise your financial journey. Remember, financial responsibility and awareness are key to making the most out of your Credit Card experience.

Apply for Credit Card


1. What is a Credit Card?

A Credit Card is like a wallet that lets you borrow money to buy things. You can repay what you owe later, but if you fail to repay the borrowed amount on time, you will have to pay extra as interest.

2. What is the difference between Debit Cards and Credit Cards?

The main difference between Debit Cards and Credit Cards is where the money comes from. With a Debit Card, you spend money directly from your bank account, so you can only spend what you have. But with a Credit Card, you borrow money from the bank, which you must repay later.

3. What is a Credit Card limit?

A Credit Card limit is the maximum amount of money you can borrow on your Credit Card. The bank sets it based on your income, credit score and repayment history. Exceeding the credit limit may result in additional fees or declined transactions.

4. Does ICICI Bank provide Coral RuPay Credit Card?

Yes, ICICI Bank offers the Coral RuPay Credit Card. RuPay is a domestic card network in India and the Coral Credit Card is one of ICICI Bank's offerings within the RuPay network. It provides various benefits such as reward points, discounts, dining, shopping and entertainment offers.

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