Credit Cards are issued by a bank, letting you purchase goods or services or withdraw cash on credit, providing convenience and flexibility. However, before using one, you need to understand its key features and critical factors. Here are essential factors to consider:

Interest rates

Credit Card interest rates determine the borrowing cost if you carry a balance after the due date. Rates depend on card type and issuer. It is calculated daily based on the outstanding balance and then added to your next billing cycle. If you make timely payments, no interest is charged. However, paying only the minimum amount results in interest accumulation. Therefore, understand these rates to avoid high-interest costs.

Charges

Some cards charge annual fees, while some have low or no fees. Fees include cash withdrawal, late payment, and foreign transaction fees. Cash withdrawals incur higher fees than regular purchases, and late payments attract penalties, increasing debt. Therefore, carefully check the fee structure before deciding and manage your card efficiently.

Credit limits

A credit limit is the maximum amount you can spend on your card, depending on factors like income and credit history. A higher limit offers greater purchasing power but should be used responsibly. Exceeding your limit leads to additional charges or damages your credit score. Thus, keep your usage below 30 per cent of the set limit to maintain good financial health.

Repayment conditions

Every Credit Card has a billing cycle and payment due date. Therefore, learn about them to avoid unnecessary charges. Additionally, timely payments help to maintain a good credit score and prevent late fees. Some cards offer flexible repayment options, like converting large purchases into EMIs, making big expenses easier to manage.

Rewards and benefits

Various cards offer rewards like cashback, discounts, and reward points, making everyday spending more rewarding via special offers on shopping, travel, dining, and entertainment. You can redeem reward points for vouchers, products, or statement credits. Similarly, cashback reduces expenses by returning a percentage of your spending. Therefore, choose a desired card to maximise rewards and savings.

Security features

Secured Credit Cards protect you against fraud and unauthorised transactions. Look for features like OTP authentication and transaction alerts. Some offer zero-liability protection, ensuring you are not held accountable for fraudulent transactions. Additionally, check your statements daily and enable transaction alerts to detect suspicious activity early. Many issuers allow you to lock or block your card immediately in case of loss or theft.

Customer support

Reliable customer support is important for solving issues like lost cards, billing disputes, or transaction concerns. Many issuers offer 24/7 support via phone, email, or live chat. Thus, check the available support options before applying to ensure timely assistance as and when needed.

Conclusion

Before using a Credit Card, understand its interest rates, fees, credit limits, and repayment terms. Adequate knowledge enables you to manage your card responsibly and enjoy its benefits. By considering the mentioned factors, you can maximise your advantages while maintaining financial health.