Credit cards have become one of the most needed financial instruments these days. This is because not only do they help us in managing our finances better, but also provide a lot of benefits.
To begin with, if you have a credit card with yourself, you do not have to carry cash with yourself. You can pay with your credit card instead. When this point is put forth, many tend to argue that the same benefit is also provided by debit card. However, such people do not understand that the way a credit card and a debit card work are radically different.
In case of a debit card, the amount of your purchase gets deducted from your bank account the instant you swipe your card. However, in the case of a credit card, it is not so. The purchase amount is offered to you as credit which must be paid in full once the billing cycle ends. This means that the amount does not get deducted instantly and as such you do not need to have money in your account at that very instant to make that purchase. Further, you are also offered reward points when making purchases with credit cards which can be redeemed using great products offered by the lender.
In the end, it all boils down to the credit card eligibility criteria which is more or less the same for every lender and mandates that the applicant must be above 18 years of age and have a regular source of income.
Broadly speaking, the types of cards can be broken down into two categories. These are -
Secured Credit Cards
These are those credit cards which are offered in exchange for some form of security. These mostly happen to be fixed deposits are any other such asset. This is highly beneficial for those who have a low credit score.
Unsecured Credit Cards
These are those credit cards which do not require any kind of collateral. However, you should ideally have a good credit score of around 750 before applying for such kind of cards.
