I am sure that you must totally be aware of the concept of a credit card. The working of a credit card is actually very simple. First, you need to pick a credit card from any bank that you think is able to meet your needs. though the application may need certain documents, there is no problem once you get the credit card delivered at your place. The main concept behind a credit card is that you take the items on credit. This means that first you purchase the products form the stores or any other venue and swipe your card to pay the bill. At the end of the month, a bill is generated by the bank and you need to pay up the total amount to the bank, within a certain time limit. However, it is just not easy to pick a bank for the card. This is why you must read ahead to know about the considerations that you need to make.
- The interest rate that is charged: You must be aware that there is a certain rate of interest that is charged by every bank on the credit card that they give you. This is because a credit card is nothing less than a loan that you are taking form the bank. The bank first pays on behalf of you and then you need to return the amount to the bank. The rate of interest is not fixed. Some factors on which the rate of interest depends is the supply and demand as well as the credit score that you have and how timely you pay the due amount.
- Grace period: Secondly, the grace period refers to the time that is given by the bank to you to pay the sum. In a way, it is a deadline that is set by the bank. Just like your phone bill payment also comes with a time limit that cannot be extended and you will be fined later, same is the case with the payment of the credit card amount.
- Bank service charges: The bank does not work for you for free. There is a certain sum that it charges as the service charge. This amount is not added instantly but reflects on the final statement of the bank. This is also an amount which differs from bank to bank. This is why you must read carefully and find out about the options that you have. Only then will you be able to choose one that suits your needs the best.
- Penalties: Last but definitely not the least, in case of failure to pay the bank, there are bound to be some penalties. This is why you need to be aware of. It does not imply that you will purposely not pay the bank. This is simply a note that you need to make because you never know when any misfortune may strike. If you enter into a contract with any bank, then you should be aware of all the terms and conditions.