Summary: Credit cards can be your key to financial freedom. With multiple features and the offers that come with it, credit cards are an excellent option for managing your expenses. Using a credit card is easy, and it is more secure than other mediums like cash. If one is prudent enough, credit cards can be their best option to save money.

While shopping on your favourite e-commerce website or ordering your dinner, you must have noticed various offers and discounts for credit cardholders. You must have also thought about credit cards when your favourite dress is in stock, but you are waiting for your salary to be credited. But what exactly is a credit card, and how does it work? Let us have a look.

What is a credit card?

A financial institution issues a credit card, allowing you to purchase an item and pay at a later date. You can purchase multiple items in a period and pay when a consolidated bill arrives. Your credit card company pays your bill for you, and you need to pay them back when they send you a consolidated bill for the month. This not only helps you sort out your expenses but allows you to manage your income better as well. 

The financial institution that paid your bill charges you for that service. This charge is majorly taken as an interest rate over your purchase. It is like taking a loan from a bank, but for relatively more minor purchases. There are other charges, like an Annual Maintenance Charge, but these are generally minuscule and are sometimes waived off by your financial institution. 

Limits to what you spend:

Credit Cards are an attractive product. It allows you to purchase an item, even if you do not have money at the time. So naturally, financial institutions have some safeguards to stop you from being greedy and defaulting at a later date. 

Your credit cards come with a limit to how much you can spend in a period. This limit is decided by your current income and ability to pay back to the financial institution. You also have different types of credit cards that are made for purchases with specific merchants or websites. This keeps your payments streamlined, and you can make more prudent judgements on where you spend your money.

Availing the benefits:

The interest rates you need to pay may worry some of you. That is why credit card companies offer you many discounts and sale options. Offers like cashback, no-interest EMIs, heavy discounts are often associated with your credit card purchases. You need to be informed about the discounts available with your product, and you can buy wisely to save a substantial amount.  

There are other benefits too. Many credit cards come with the additional benefit of complimentary airport lounge access, free movie tickets every month, free insurance etc. These benefits add up to huge savings and allow you to avail of services that you frequently need.

Never forget the points:

This is one of the most exciting privileges of many credit cards. Many financial institutions give you points for every rupee spent via their credit card. These points can later be used to purchase items listed on their website. If you are a high spender, you will enjoy this privilege. 


One of the more critical reasons people are increasingly moving to credit cards is their security feature. Carrying large amounts of cash is neither convenient nor safe. Carrying a plastic card allows you to move around without worrying about any robbery. In case your credit card is lost or stolen, you have an option to block your credit card, keeping your money safe immediately. 

Credit card companies also inform you about all your purchases. This will help you sign out any expenses you have not made and detect fraud immediately. However, this is not something to be worried about, as your credit card company tracks your expenditure and would immediately inform you if an out-of-place expense is made.

Financial freedom: 

Credit card companies give you financial freedom like no other. Salary credited next month should not be a constraint for any immediate need. Expenses like hospital bills, education expenses, etc., can not be avoided, and a credit card helps you with these issues. The peace of mind that comes with owning a credit card cannot be overstated. It is always nice to know that you have money if you need it urgently. 

Your savings and investments may take time to withdraw, but with a credit card, you can immediately pay for your needs. It would help if you were always prudent with spending your money and where you get your credit card. Shepays can be your credit card partner and allow you to soar your financial wings, for your credit card becomes your best friend.


1. How is a credit card different from a debit card?

Answer: With a debit card, money is instantly debited from your account when you purchase. A credit card allows you to pay later, with an interest rate added to your amount.

2. What are the different types of credit cards?

Answer: Credit Cards are broadly classified into Standard and Specialised Credit Cards. Standard credit cards come with basic features, with nominal or zero annual fees, while specialised credit cards may have additional features and relatively higher annual fees. 

Cards are sometimes classified as General, Branded, Cashbacks, and Rewards, each having unique features.

3. What is a CVV number?

Answer: A CVV number is a three-digit pin on the back of your card used during online transactions. CVV number makes your card secure and disallows transactions from unwanted sources if your Credit card details get leaked. Please remember not to disclose your CVV number to anyone.

4. What is the eligibility for a credit card?

Answer: The eligibility criteria can vary from one credit card company to another. It can also depend upon the type of credit card you want. 

However, these are some essential criteria that credit cards companies generally have:

  • You must have an Indian address.
  • You either need to be salaried or self-employed. You will also be required to show proof for this. It could be a salary proof or an acknowledged Income Tax Return.
  • You must have a savings bank account in an Indian bank.
  • You must be at least 18 years old.
  • You must qualify the minimum income criteria set by your bank for your chosen credit card.

5. What is the difference between a charge card and a credit card?

Answer: Charge cards do not allow balances to be carried forward, while you can do the same with a credit card. Charge cards generally do not have a credit limit, while credit cards do. There are many other differences between them based on the credit card you choose.

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