ALL >> General >> View Article
Understand Your Credit Card Before You Use It

Though the user gets to purchase an item instantly without any hassle, the interest that a bank charges on a credit card amounts to around 36% to 42% per annum. The interest rates on a credit card are probably the highest, with general loan rates falling in relatively smaller brackets. For a credit card user, this instrument of credit can mainly be seen as amplifying debts, but for banks, credit cards are excellent for their businesses.
How do banks benefit from credit cards?
Forming the core of the credit card business, banks enroll merchant establishments namely hotels, retail shops, agencies or any place where money transactions can be made. The banks are called ‘acquiring banks’ when a merchant is enrolled and the bank processes credit or debit card payments on behalf of the merchants. The bank accepts card payments from credit card issuing associations like Visa, MasterCard, American Express, etc., for the merchant accounts. Merchant accounts have various charges imposed on them like acquirer fees from the banks, interchange fees set up by the associations and other fines from the bank.
Customers ...
... delaying their credit card payments, paying partly or missing to paying the minimum amounts due before the set date add to the profits earned by banks on their credit cards. For any individual delaying their payment, the bank constantly keeps increasing the interest rate on the outstanding balance. The customer ends up paying more than the actual cost of the item purchased. If a customer pays his dues only partly and carries forward his balance, he has to pay interests on all his purchases without availing any free credit period. If the minimum amount payment is also missed before the due date, the bank also increases the interest rates it charges the customer.
What is the best solution?
Customers can avoid paying extra on any kind of credit card purchase, by paying their minimum monthly payments before the due dates and if possible by paying off the entire outstanding amount completely. Credit card users who have a healthy payment pattern generally get free credit periods from the banks before the reimbursement is done to the credit card issuing bank. The free credit period varies from 15 to 40 days, depending on the issuing banks.
Add Comment
General Articles
1. Hr Management: How To Handle Termination Of EmploymentAuthor: Rosalina Wolf
2. Dme Billing And Home Health Billing: Integrated Medical Billing Services For Better Care
Author: Charlie Robinson
3. High Employability Through 64 Kala Concept
Author: Chaitanya Kumari
4. Softlink Global Ceo Amit Maheshwari Honoured With Best Entrepreneur Award At Maharashtra Corporate & Education Excellence Awards 2025
Author: Softlink Global
5. Why Businesses Are Switching To Open Source Alternatives To Crystal Reports
Author: Vhelical
6. Why Eastern Europe Is The Smartest Bet For B2b Travel In 2025
Author: seopass
7. Sap Erp Software In Udaipur – The Digital Core Of Scalable Business Success
Author: Akansha
8. Gws Tele Services: Powering India's Digital Future
Author: GWS Tele Services
9. The Future Of Clinic Management Software: What To Expect In 2026
Author: sheetal
10. 11 Hills Park In Dubai By Townx
Author: TownX
11. What Happens If You Don’t Replace A Missing Tooth?
Author: Dr indveer reddy
12. Why You Need A Tracker For Your Car: Benefits, Features & Buying Guide
Author: What Is a Tracker for Car?
13. Create A Marketplace Like Amazon
Author: davidbeckam
14. Autonomous Vehicles Market Insights And trends
Author: Rutuja kadam
15. Key Trends In The Automotive Parts sector
Author: Rutuja kadam