How Do Credit Card Companies Make Money

How Do Credit Card Companies Make Money?

There is a reason why credit card companies are always looking for their next best client. When people start using their service more, they can make more money based on the usage that is served to you from their side. There are around issuers who advance over millions of purchases made by their customers. And the return can come in billions to the credit card companies.

Credit card companies in India

Recently for the new age foray of digital India, the bank is always looking and scoping out credit cards for their users for the best of interest for their end. When it comes to India, there are mostly banks that issue the credit card to the people. So when it comes to publishing your new credit card, then the bank will be making money. From the bird’s eye point of view, it is like a charitable business here.

This means that when you are asking for a credit card, then the bank will issue the same for you. These credit cards are released from the source of the third parties which are offered to these banks. When it comes to issuing credit cards for the customers, then the bank issues it for the people and provides a credit for it. Then after the same, the customer has to pay the bill for the usage of the card.

Now, when it comes to making money, then the only major fees that the bank gets are by the interest, which is levied on the outstanding amount which is ready to repay. In case of delay of payment through your credit card, the bank will charge a collected rate of interest onto the same.

Anyways, there are also other sources through which the banks and credit card companies make money with the usage of these credit cards that are issued to your name. This will be later discussed with the help of this article.

How Do Credit Card Companies Make Money?

Here are how the credit card companies make more money and earn profit as well with the use of their business.


When it comes to the age of the digital period, then do you know who makes money these days? Anyone who can help your brand or company extend its reach. In this digital world, it becomes difficult for the common man to continue the source of his business, and this is why brand or marketing tie-ups are essential. For example, a lot of brands are spending more on their digital marketing because they need a better reach of the audience from all around. It can help them to gather the clients for their said work.

The credit card companies have direct access to the whole of the customer base, and it can influence the spending as well. Therefore what these credit card companies do is that they help for both types of brand promotion and the generation of sales. To reach new customers, it is a useful tool here. Plus, they get paid for the brand promotion that they are making from here.


For example, let’s take a look at the leading banks here.

As per the RBI data here, HDFC banks have issued around 12 million credit cards, followed by the SBI bank, which has issued around 8.7 million cards. Then comes the banks like ICICI Bank, the Axis Bank, etc. So when it comes to coming or gathering customers from all around, then HDFC Bank, SBI and ICICI bank has direct control over the same and over a crore of customers who have issued their credit cards.

So if the banks are paying around lakhs for winning over the customers with the help of their brand promotion, then they are getting the doubles in return through here. Brands are always ended up in marketing tie-ups with the credit card companies so that they can get cash backs on their set. On the other hand, there are two types of tie-ups that can be tried here. One is the low value, and the other ones are the high value. Plus, there are interest charges levied onto the same too.

Interest gathered onto the balance which is outstanding

It is a universal fact that credit card companies can make money based on the benefits which are charged on your balance amount. Among all form of credit facilities, the interest rate which is loaded onto your card is the highest, and they are even higher than the private lending that you have.

This means that when we are talking about the higher amounts, then we are speaking as high as 40-42% interest, which is charged annually and which is about 3-3.5 %, which is billed monthly here.

Credit Card Interest Rates in India Bankbazaar

(Image Credits: PaisaBazaar)

According to the facts and the stats which are provided by the credit card companies, around 60% of the people or the credit card holders do not pay their levied amount right on time, and this is when the interests on their credit can be charged to them. These customers are the primary source of income for these credit card companies out there.

The amount which is not paid by the customers is always termed to the absolute figure. This means that when we are talking about 60%, this does not mean that 60 people out of every 100 are not able to pay their amount. This means that some even have a higher outstanding than the other, and; this is where their interest is levied.

Also read: 10 Best Credit Cards in India [With Exceptional Benefits]

Cash advance charges also generate payment

Here is another way through which the credit card companies can charge in the amount and get the income for their source. Usually, the cash limit for the credit facility is around 20-40%. This cash limit comes handy in case of the emergency which can be met during the time of shortage of cash, etc.

So if you take an advance payment from the bank, then the bank will charge an interest rate of about the same from you on the amount that they are granting you. This is one of the costliest ways and one of the most prime ways through which credit card companies can make cash.

Merchant Fees

Another way from where a credit card makes money is merchant fees. Whenever the credit card user makes any payment using their credit card, the entire amount does not go to the retailer. The credit card companies charge a small fee as the percentage of the purchase amount for providing safe and secure payment transactions.

This charge is known as a merchant fee or swipe fee. This merchant fee can be anywhere between 1.5-2% of the transaction value and hence serves as a huge revenue source for the banks.

Although, the credit card user doesn’t have to pay any additional fee, however, the credit card companies take a portion of the profit from the merchants. Therefore, the merchant fee only affects the merchants. Anyways, some merchants may use a ‘credit card surcharge‘ in addition to the cost of products/services that they are selling in order to off-set the merchant fee.  This surcharge is waived if the customer prefers cash or debit card payment as the fees on the debit card is comparatively lower for merchants.

Annual and renewal fees

Now comes to the other charges which come with your credit card. When you are issuing credit cards from the bank, then there is an annual fee that you have to pay. And also, for the renewal fee, which means that you have renewed your credit card after it has been extended to a valid period.

These charges may be waived off by the banks if you’re an active spender and cross their pre-specified annual expenditure through credit cards. Anyway, these charges are usually given out through the customer whose value of spending is meager.

In other words, credit card companies will charge you a fee which you eventually have to pay on the annual or during the time of the renewal as well.

Also read: The Pros and Cons of Credit Cards in India

Closing Thoughts

As discussed in this article, you have found out that the credit card companies do have a lot of sources for their salary here. The credit card companies make money by charging interests on the customer’s delayed payment, merchant fees, networking and marketing with branks, annual and renewal fees, etc.

So if you don’t want to levy the heavy-duty and the charges for your late payment, make sure of the financial tracking that is happening with the help of your card. Take notes and understand your credit billing cycle as well so that you can figure out when to pay your fees and to keep the minimum as well.

10 Best Credit Cards in India With Exceptional Benefits cover tradebrains

10 Best Credit Cards in India [With Exceptional Benefits]

10 Best Credit Cards in India in 2019 with exceptional benefits (Updated: October 2019)

Credit cards are everywhere. These days, they are used in almost all underlying operations like purchasing items from the store or even for your online sale as well. A credit card helps to shape you a good lifestyle, and since there is a fixed amount for which you have to take in the credit for, you can even stop yourself from the overspending habits that you have. They are the growing aspects of the economic market, and as we are towards the source of digital transactions, credit cards are becoming more and more efficient these days.

Moreover, Credit cards are instantly safe for you to use for any source of electronic payments since they are backed up by full security. As a matter of fact, credit cards are comparatively safer than debit cards.

However, since each and every bank is offering new credit cards with amazing rewards, which one to choose? In this article, we are going to discuss the ten best credit cards in India so that you can choose the one that suits you the best.

Why Credit Cards?

Credit cards are very similar to a debit card issued by a bank or a financial institution. However, credit cards let the cardholder borrow money from the financial institution to pay for goods and services. It imposes the condition that the cardholder must pay back the borrowed money after a certain period of time along with some interest as well as any additional charges if agreed.

The company issuing the credit card may also put up a line of credit (LOC) to enable the cardholders to withdraw money in the form of cash. The institution customarily presets the borrowing limits of the customer based on his individual rating. The borrowing limit can be set monthly, quarterly or annually, according to the profile and needs of the customer.

This mode of payment is one of today’s popular payment method for buying goods and services because of the following reasons:

  1. Purchasing Power: Credit Cards empower the holder to purchase locally as well as overseas also. They also let you purchase through phone, online and at stores, of course. Most of the credit cards, especially MasterCard and Visa, are accepted virtually anywhere.
  2. Shop now, pay later: Credit Cards make it very easy to buy on credit. For example, if you’re spending money on regular monthly expenses, it’s usually not a good idea to use your bank balance. Instead, you can buy through credit card and return the money to the bank by the end of the month. This way you have used the leverage instead of using your own money. Besides, credit cards are the best tool to help us track our expenses and hence it can help you in budgeting.
  3. Rewards: Mostly, all the banks and financial institutions who give credit cards offer various rewards and cashback on our day-to-day purchases. For example, if we book a movie ticket, there are numerous offers available from different companies. Some also offer benefits like ‘Buy 1 Get 1 ticket’, which results in the benefit of the customer only.

In addition, Credit cards can also act as emergency protection. In case of a medical emergency or unexpected event, one should maintain an emergency fund which must be equal to his/her six to twelve months of salary to keep him/her. A credit card can help you to fight with the unforeseen expenses.

Also read:The Pros and Cons of Credit Cards in India

10 Best Credit cards in India to choose:

Finding a sound credit card in India can be a tough job for you because you have to go through a lot of things. First of all, you have to take care of the facilities that you are getting from your card and even the bank through which it is being provided to you. Some of the credit cards are immensely useful for your shopping habits, and they come with excellent features, as well.

So here are ten of the best credit cards in India, which you need to check out right now.

1. American Express Membership Reward Credit Card

American express membership rewards card

Coming to the list of the top used credit cards in the Indian market, the MRCC is the top-rated one. It helps you to get reward points on your spending so that you can redeem it on your next purchase or issue. The annual fee for this card is Rs 1,000 plus GST. The renewal fee for this card is Rs 4,500 plus GST.

Current Offer (Till 31st December 2019)

  1. First-year fee: 0
  2. 2nd year Fee:1,500 INR* + applicable taxes

Eligibility Conditions:

  1. The applicant should be over 18 years of age.
  2. The applicant’s annual income should be of Rs. 6 Lakhs and above (in the case of Self Employed or Salaried).
  3. Good credit history and no payment defaults.


  1. You can get 4,000 points as a bonus on the first membership for this card.
  2. Earn up to 1,000 points as the membership reward points every month with this card.
  3. On payment of the annual fees by this card, you can get around 5000 bonus points.
  4. Redeem your reward, and you can get 18 karats and 24 karat gold collection from the program of the annex.
  5. Other benefits like zero lost card liability and others come as well.
  6. The Annual Membership Renewal fee of Rs.4500 will be 100% waived off if the total spends on American Express Credit Card in the immediately preceding membership year is Rs.1,50,000 and above.

Here’s a quick link to apply for the American Express Membership Credit Card!

2. Citi Premier Miles Credit Card

Citi Premier Miles Credit Card

If you want to save some money with the help of your credit card system in exchange for the other facilities like flights, international hotel/airline loyalty programs, then this is the one for you. The annual fees for this card are 3000, and the renewal fees are also the same.

  1. A welcome reward of 10,000 PremierMiles on the first transaction of at least Rs 1,000 with first 60 days.
  2. Spend around 1000 with this card, and you will get 60 days of insurance and 10000 bonus miles.
  3. Get an additional 3000 miles on your card anniversary every year.
  4. Earn up to 4 miles for every Rs 100 that you spend.
  5. Earn 10 miles for every Rs 100 on the transaction that you do with the airline world.

You can redeem your miles for flight tickets across 100s of airlines or attractive vouchers and merchandise from premium luxury and electronic brands on Citibank online catalog.

You can read more about the benefits and apply for the Citi Premier Miles Credit Card here.

3. HSBC Visa Platinum Credit Card

HSBC Platinum Credit Card

HSBC is a trusted source for online credit cards that has served over a million people from all around the world offering amazing discounts on movies, flights, restaurants and more. There is a zero annual fee for this credit card, which you can have for yourself. The renewal fee is also nil for this card.

Eligibility Conditions:

  1. The applicant should be aged between 18 to 65.
  2. The applicant’s annual income should be Rs. 4 Lakhs and above (in the case of Self Employed or Salaried).
  3. Current City of residence should be Bangalore, Chennai, Gurgaon, Hyderabad, Mumbai, New Delhi, Noida, or Pune
  4. Good credit history and no payment defaults.


  1. Nil joining and annual fees.
  2. On making the first transaction with this card, you will get a Rs 2,000 voucher from the clear trip and Rs 250 Swiggy voucher.
  3. Within 90 days of the card issuance, you will get 10% cashback up to Rs 2,000.
  4. Earn 3x reward points on the hotel telecom and another service that you want to use before the expiry.
  5. Get five times accelerated points towards the rewards if you make a purchase, and the total spending limit is above Rs four lakhs in an anniversary year.
  6. Get a movie ticket voucher worth Rs 500 on spending over Rs 50,000 in a calendar month.
  7. Air Miles Conversion on JetPrivilege and Singapore Airlines for booking flight tickets.

You can read more about the benefits and apply for the HSBC Visa Platinum Credit Card here.

4. Standard Chartered Manhattan Credit Card

Standard Chartered Manhattan Credit Card

The name might sound fancy to you, but this credit card comes with a lot of facilities for you to use anytime that you want. The joining fees for this card are Rs 999, which is the same as the renewal fees, as well.

Eligibility Conditions:

  1. The applicant’s age should be between 21 and 65.
  2. The applicant should have a stable monthly income.
  3. The applicant should belong to credit cards sourcing cities/locations of the Bank.


  1. When you make your first transaction with this card, you will get a voucher for 2000 from a book my show.
  2. Get 3x reward points for all the expenses that you have per Rs 150 spent.
  3. Get 5% cashback when you use this credit card at the supermarket. Enjoy multiple offers for this card that you want, like discounts on the traveling, dining, and other categories.
  4. Under the excellent life program, you can avail of offers as a discount on several purchases on Spicejet, Goibibo, Croma and other partners.
  5. The renewal fee of Rs 999 is waived on spending Rs 1,20,000 or more in the Year.

Here’s a quick link to apply for the Standard Chartered Manhattan Credit Card!

5. HDFC Regalia First Credit Card

HDFC Regalia First Credit Card

For all the HDFC bank users from all around, this credit card is handy and comes with multi-features for you. The annual and renewal fees for this card is Rs 999.

Eligibility Conditions:

  1. For Salaried: Age: Min 21 yrs & Max 60 Yrs, Income: Gross Monthly Income> Rs 40,000
  2. For Self-employed: Age: Min 21 yrs & Max 65 Yrs, Income: ITR > Rs 5 Lakhs per annum


  1. You can get complimentary priority pass membership on all the airport lounges.
  2. Earn up to 4 Rewards points on every 150 rs that you spend on your card.
  3. 1% fuel surcharge waived off on fuel transactions.
  4. On selected restaurants, you can get around a discount of about 40%.
  5. Users will get 7,500 bonus points every year on spends of Rs.6 Lac or more in each anniversary year.
  6. Convert your reward points, and then you can use it for the coverage of the air miles on your card.

You can read more about the benefits and apply for the HDFC Regalia First Credit Card here.

6. ICICI Bank Platinum Credit Card

ICICI Bank Platinum Credit Card

This ICICI bank platinum chip credit card is the one for you to use anytime you need it for. There are so many added discounts and offers you can get from here. There joining fee is Rs 199 and the annual renewal fee is Rs 99, which can be waived if you spend ₹ 50,000 or more annually on your Card.

Eligibility Conditions:

  1. The applicant’s age should 23 or above years of age.
  2. The applicant should have a stable monthly income.


  1. Make contactless payments by just waving at the card in front of the NFC terminal.
  2. Earn up to 1 Payback for every point on the purchase of 100 rupees that you make.
  3. Get two paybacks for every 100 rs that you spend on fuel.
  4. You can even avail of the 1% fuel surcharge waiver at the HPCL pumps.
  5. There are selected restaurants where you can opt for a 15% discount on your card.
  6. Redeem the reward points, and you can get the gift vouchers as you want.
  7. Lenskart – existing offer of Rs 500 off on purchase of Rs 3000 or more valid till December 31, 2019

Here’s a quick link to apply for the ICICI Bank Platinum Credit Card!

7. SimplyClick SBI Credit Card

SimplyClick SBI Credit Card

When it comes to the banking institution, then SBI is one of the chosen ones from the whole lot. The annual fees for this card are around 499 and the renewal fees are the same as well.

  1. Get gift card worth Rs.500 on joining as your reward gift.
  2. You can earn one reward for every 100 that you spent on it.
  3. Cardholders can earn e-voucher worth Rs.2,000 on annual online spends of Rs.1 Lakh
  4. Get 5x rewards on all the online spends.
  5. Get 10x reward for the online spend, which is partnered by SBI – – Amazon / BookMyShow / Cleartrip / Lenskart / Netmeds / Rentomojo / UrbanClap
  6. 1% fuel surcharge waiver for each transaction between Rs 500 & Rs 3000
  7. Spend 1 lakh in a year, and you can get your annual fee of Rs 499 reversed.

You can read more about the benefits and apply for the SimplyClick SBI Credit Card here.

8. American Express Platinum Travelcard

American Express Platinum Travelcard

If you are a travel enthusiast, with the help of this card, you can do a lot of things for yourself. For example, you can get through the make my trip offers and much more. The annual fees of this card are Rs 3,500, and the renewal fees are Rs 5,000, second year onwards.

Eligibility Conditions:

  1. The applicant should be over 18 years of age.
  2. The applicant’s annual income should be of Rs. 6 Lakhs and above (in the case of Self Employed or Salaried).
  3. Good credit history and no payment defaults.


  1. Get a welcome gift of about 5000 bonus from the use of the first transaction that you make with this card.
  2. Earn 1 membership reward point for the Rs 50 that you have made for the utility, bill payments, etc.
  3. On spending about Rs 1.9 lakhs with the use of this card, you will get a travel voucher worth Rs 7700.
  4. Further, on spending about Rs 4 lakhs with the use of this card, you will get an additional travel voucher worth Rs 11,800.
  5. Cardholders can also enjoy 4 complimentary visits per year to airport lounges across India.
  6. There are exclusive offers to making my trip here like the Taj Experiences E-Gift Card worth Rs. 10,000 from the Taj Hotels Palaces Resorts Safaris.

Here’s a quick link to apply for the American Express Platinum Travelcard!

9. Indian Oil Citi Bank Credit Card

Indian Oil Citi Bank Credit Card

If you are concerned with the rising price of the oil and fuel, then you need to go for this card. The annual fees and the renewal fees are Rs 1,000 for this card. This annual fee on the card is waived when you spend Rs.30,000 or more on your Card in a membership year.

  1. Get up to 71 lit of free fuel every year in the form of the fuel surge.
  2. Full waiver of the fuel surcharge (1%) on fuel purchases
  3. Earn four turbo points on every Rs 150 spent with your card (1 Turbo Point equals Rs.1 worth of fuel).
  4. Get two turbo points on every Rs 150 spent on your card on the grocery, and other supermarket pays too.
  5. The accumulated turbo points that you have will never expire.
  6. Cardholders will also get up to 15% savings across participating restaurants with your Citi credit card.

You can read more about the benefits and apply for the Indian Oil Citi Bank Credit Card here.

10. SBI Elite Credit Card

SBI Card Elite

This credit card is specially meant for those who believe in spending and saving at the same time. The annual and renewal fees of this card are Rs 4,900.

  1. Get a welcome e-voucher of about 5000 for an array of brands like Yatra, Batra, Hush Puppies, Pantaloons, Shoppers Stop.
  2. Get free movie tickets worth Rs 6000 in a year.
  3. On spending four lakhs in a year, you will get a bonus reward point of 10,000.
  4. Earn 5X Reward Points on Dining, Departmental Stores, and Grocery Spends
  5. Get 2 Reward Points per Rs. 100 on all other spends, except fuel
  6. Enjoy 2 complimentary Domestic Airport Lounge visits every quarter in India
  7. 6 complimentary Airport Lounge visits per year, outside India
  8. SBI Card ELITE also offers the privilege of the lowest Foreign Currency Mark-up Charge of 1.99% on International usage.
  9. Accelerate your reward earning when you get it with the use of the card on the grocery shopping and the other items.

You can read more about the benefits and apply for the SBI Elite Credit Card here.

Closing Thoughts:

These are the best credit cards in India that you can pick. If you do not have a credit card yet and you’re applying for the first time, Standard Chartered Manhattan Credit Card or ICICI Bank Platinum Credit Card can be a good choice for you.

Anyways, you do not need to have just one credit card. You can apply for multiple cards if you have got a strategy to get the maximum value out of them. Choose your credit cards accordingly and find out the ones which fit you the most, depending on your lifestyle and preference.

Why Credit Cards Are Safer Than Debit Cards cover

Why Credit Cards Are Safer Than Debit Cards?

When debating on the topic of why credit cards are safer than debit cards, you have to understand the logic behind both of them. There are often that you may ask yourself what type of card can be readily used for a safer purchase, and this is when you need to understand their benefits and the uses of both the cards. Some people end up confusing themselves since they cannot get to the point of which one to use for their day to day transactions.

First of all, Credit and debit cards are not the same cards that you can use

Each is a plastic rectangle-shaped card which helps you to pay for the service or the product that you have bought for yourself. In the modern age of digitalization, around every place have a credit or a debit card facility option here for you. Typically they both look the same, so some people undertake for the self-belief that both cards have the same purpose, and they are used for mere transactions.

Well, here so where they can go wrong. Credit cards are sometimes used, which can be heightened for the consumer to stay protected from the frauds. But there are some of the personal safety advantages that you can get from the usage of the debit cards as well. So with the help of this article, you will know which card you can use for a safer online or offline transactions.

The primary difference between credit and debit cards:

Although both of them will look alike in front of you, the credit and the debit cards have different purposes to them. You cannot undertake the function of both the cards based on their appearance. So here is the following thing which you have to understand.

Credit cards are equipped with a credit line:

This basically means that there is a fixed amount of money which you can try it borrow from the lender. After every charge that you make, the issuer pays the merchant the expected amount, and the amount that you can hire to your name is reduced from the all total sum.

So if you have a credit line of around 20,000 and you have got about 5,000, you will have 15,000 left to borrow from your issuer. The more you use your card, the less amount you will be left with from your issuer.

After the payment due period, there is an interest that is charged onto the 5,000 that you have applied for yourself. So unless you have paid in for the 5,000, the interest fee for the grace period will be charged on that basis. If you pay less for this month, then the amount will be rolled to the consecutive month. And if you have paid it al-together, then your amount will be charged back to 20,000. This is how a regular credit card works.

Also read: 10 Best Credit Cards in India [With Exploding Benefits]

For the debit card, there is no borrowing involved here:

This means that you don’t have to borrow any sum of money from your issuer to get to a transaction. So when you are using a debit card, you will be tapping into the fund of cash that you have in your bank.

After you have made the purchase there, the money which is deducted will be transferred from your account to the bank account of the merchant. This way, the amount will be paid to the merchant, and it will be deducted from your source.

Now there are a lot of banks out there who will charge you a negligible amount of interest on the purchase that you make. So with the help of your debit card, you will know how much amount is really in your bank. You can even add to it by checking it anytime that you want.

Why Credit Cards Are Safer Than Debit Cards?

Safety against frauds for Debit and Credit Cards

fraud transactions Why Credit Cards Are Safer Than Debit Cards

In India, both credit and debit cards are subjectively safes to use as there is an additional factor of authentication required to validate any transaction. For making transactions, you receive OTP on your registered phone number to confirm the transaction. Therefore, until and unless your cards and phone number are both hacked/stolen together, it is very difficult to make fraud online transactions.

However, withdrawing money from your debit card or credit card from an ATM doesn’t require OTP validation. And here, if your debit card is stolen along with your PIN, the fraudsters can withdraw a huge amount if you have got a lot of money in your bank account. This may generally happen if you are not aware of the transactions i.e. when your active phone number is different than the registered number. Here, you do not receive the transaction alerts from the bank via messages. Similar is the case when you do not care to read the transaction messages sent from your bank and hence do not block your card immediately in case of fraud or stolen.

On the other hand, if we look into the credit cards, there’s a limit on the withdrawal and it doesn’t depend on how much money you have got in your bank account. The fraudsters cannot withdraw cash more than this predefined limit.

Further, a major drawback in the case of fraud on a debit card is that you lose the amount from your bank account. Even if you raise a complaint to the bank, it may take months for the bank to refund that amount. This is because they need to verify and confirm the fraud activity. They may ask you if you’ve shared the Pin/OTP with any of your friends/colleagues etc. In the case of ATM transactions, getting the CCTV footage and verifying that the person wasn’t you is definitely not a fast process. And throughout this verification process, all you can do is to wait patiently to get back your money.

On the other hand, when the same happens against a credit card, you can raise a complaint and get appropriate reversals before the next credit card billing cycle. Moreover, as this money never belonged to you, it won’t hurt you economically and even if the investigation process goes for weeks, you can remain calm. Overall, in terms of fraud protection, we may conclude than credit cards are safer than debit cards.

Also read: 5 Things You Should Know Before Getting Your First Credit Card.

Credit And Debit Card Usage:

When you are using debit cards, you might check to see that they are not user or consumer-friendly over here, but you can use them for compelling other reasons which are presented.

First of all, if you don’t have an overwhelming debt to your name, then debit cards are the ones for you. By focussing on the expenses that you make for yourself with the use of your debit card, you can solve the financial crisis that you face. Debit cards let you use the amount that you have inside your bank and not more than that. If you apply for the amount which is over in limit, then it will be declined from the source.

Credit cards usage

Coming to the usage of the credit cards, they have a user-friendly base, and you can use them anytime by ensuring the right and even your safety as well. There are some clear, substantial advantages of using them. For example, if you want to go out for shopping then take your credit card with you. It is a preferred instrument since it helps you to have your way.

Plus, the internet trolls who are sitting every right now and then won’t be able to hack into your account and see how much amount you have left. Besides, when you are going in out for traveling, then credit cards are the key or the prime thing to use. They can be used for checking accounts, and you can always fall short of cash when you are outside. So credit cards are there to save you from the hustle or the worry that you might face by yourself.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for credit cards online.

Final verdict

Well, we all know that you can use both these cards for your transaction habits. Like credit cards, it helps you to run the funds when you are in need of an emergency. Debit cards are used for you to save the fund in your bank and then use it carefully by understanding your expenditure limit. Certain people can get into a credit card debt if they have not paid out their expenses or the issues that they have made from their lender. In other words, if you want to never fall into a huge trap of expenses and debts surrounding you from all around, then debit cards are a go-to option for you.

Regarding consumer protection, definitely credit cards are safer than debit cards. From fraud transactions to creeps looking into your bank account, all can be lessened by using credit cards. Moreover, there are some of the awesome advantages that you can even get for yourself by the usage of these cards like cashback and rewards.

Final advise, having both at your disposal is an excellent technique, as well. This way, you can use the cards accordingly to the given scenario that you please to have.

The Pros and Cons of Credit Cards in India cover

The Pros and Cons of Credit Cards in India

The Pros and Cons of Credit Cards in India:

The nature of our society has been marked by different political, social, and economical changes through different modes and means. Out of these, the sea change brought about by technology has been very crucial. Technology has changed our outlook towards life- from communication to transportation to payments.

With the rise in the population of the Netizens today, the countries are on a ‘cashless’ spree. The e-commerce payment system has not only digitalized the whole process of transactions but has also made it convenient and easy. Some forms of e-transactions include ATM cards, Credit Card, E-wallets, Debit Cards, and Cryptocurrency, etc.

Out of all the modes of e-commerce payments, credit cards are the most common form. Credit cards are totally different from debit cards- a debit card is not a credit card. When we use a debit card, the money is being deducted from our checking account. On the other hand, when we use a credit card, we are basically borrowing money from the bank which is to be repaid later according to the directed time.

The Pros and Cons of Credit Cards in India

Credit cards allow us to make payments through borrowings against a credit limit. There are various advantages of using credit cards over debit cards. They can be summed up as:

Pros of Credit Cards in India:

  1. It helps one to go cashless. Not everyone wants to carry cash all the time. Moreover, withdrawing cash anywhere and everywhere is not feasible and convenient.
  2. There are a number of rewards associated with credit cards. Some banks provide discounts, cash backs, etc that are exclusively available on some credit cards.
  3. Buying expensive products and services is far easier from credit cards. A hefty amount is not spent at one go. You have to repay the amount in installments (EMI) with even zero interests.
  4. Credit cards have theft protection. If you lose any money or the card gets stolen, the liability is guaranteed by the bank. In contrast, if cash is lost or stolen, it is very hard to get the money back.
  5. Credit cards provide travel insurance against lost luggage, canceled trips, and even death. The coverage that one gets depends on the respective banks and offered terms.
  6. Credit cards help in the cheaper conversion of currency. Cards such as Visa or Mastercard can save up to 8% currency as compared to cash.
  7. Credit cards are the best tool to help us track our expenses. It helps us in budgeting and making effective plans.
  8. It saves money that is spent on buying extended warranties for maintenance and coverage. The advantage of extended warranties is free on purchases done on many credit cards.
  9. They are a whole lot safer to use. If you are a thrifty credit card user, you do not have to worry about excess payments and unreasonable interests. All you have to do is to repay your debts on time and maintain a good credit score.

Also read: 10 Best Credit Cards in India [With Exploding Benefits]

Pros of Credit Cards in India

Cons of Credit Cards in India:

While tallying up the pros and cons, we come at a point where we realize that no matter how common credit cards are, there are some cons that we should consider while issuing one—

  1. The threat of overspending always looms large. There are times when we tend to spend more than what is required. People go on buying their desires rather than their necessities, ending up in dire consequences. All we are left with are overburdened shoulders pressed by unthinkable amounts of debts. This vicious circle has led to the breakdown of many companies and business tycoons.
  2. Borrowings through credit cards are of the high cost. The interest charged is a little higher and it is never uniform. There is no guarantee that the rates will be constant. It can rise unexpectedly causing a huge cut in our budget and expenses.
  3. Not everyone can apply for a credit card. The requirements are just too many. If you have a low income or a weak credit history, you cannot get a credit card. In some cases, even if you meet all the requirements, you are not eligible for a credit card because it simply depends on the bank. The more connections you have, it is easier to get credit cards and loans.
  4. Maintaining a credit card is a little difficult. You not only need to have a good credit score so that the bank allows you to borrow, but you also need to pay the annual fees in order to carry on with your service with rewards. The annual fee for a few cards is high for no reason.
  5. If you are caught into the trap of overspending, misuse of funds, missed payments, you will suffer badly. You might find it difficult to get good rates for future payments or get overburdened by debts or even worse- due balances can get the bank file a lawsuit against you.
  6. The details and intricacies of credit card documents are not told properly. The statements are written in such technical words and small prints, it will be difficult to go through it. Those who do not put extra effort into actually getting it reviewed land up in some trap where the interest rates are duly high or the annual payments are increased successively without your knowledge. Therefore, getting your documents reviewed is very important.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for credit cards online.

Bottom line:

By way of conclusion, we can point out that we may opt for a credit card but only keeping in mind the restrictions.

If we are ready to clear the debts on time, pay the interest on the overdue amount, maintain a high credit score and not overspend, then we should apply for it provided we meet all the requirements. Using credit cards/debit cards/ATM cards or any other means of e-payment is a sign of progress for any country, therefore, we should encourage cashless modes of payment as much as we can.

How to check your credit score?

How to Check Your Credit Score?

In this world of the internet, everything is possible. From paying your gas bills to checking off your loan repayment or even how much credit score you have, everything is near our face and at the palm of our hands. Earlier it was a huge deal to check your credit score because people had to get permission from their respective banks and get the work done. But this is not the case anymore. If you can sit at the comfort of your own home and create an account, you can check your cibil score or credit score if you have a laptop, a desktop and even your mobile phone with an active internet connection.

So why you need to check it?

Lenders are always trying to fish into your credit score. Your credit score matters to you, and even when the time you are obtaining personal or home loan. Your credit score is the primary determinant as to how fast you will get your loan right on time.

Whether you have a credit card or you have opted out for a mortgage, your credit score will follow you everywhere you go. So it becomes practically inevitable for you to escape from the worst which could happen. It is a score that reflects on your credit track record, and the more you make your payments on time, use the better or lesser loan, etc., the better your score will be.

So how can you check your credit score?

If you want to check your credit score, then you have to go through the CIBIL check. You might think that this is yet another complicated term up in your way, well it is not.

CIBIL means Credit Information Bureau India Limited. It is leading credit rating agency which helps to keep track of all your credit transaction and records. It helps to shine a light on your creditworthiness as well.

Due to the presence of CIBIL, the people of India are financially stable now and can check off their credit rates on the online. It has managed to make the financial markets permanent with the knowledge of educating the people to what they want and how they should process their spending. It is because of CIBIL that the financial market is transparent.

And it has sown a structure for the Indian people to rely on so that they can do the best for themselves and make sure that they can manage the risks as well as control their lousy loan from the bank that they are taken their amount in.

Also read: 10 Best Credit Cards in India [With Exploding Benefits]

How do the CIBIL works?

When you want to check your credit score from the online source, then you have to take the help of the CIBIL here. Banks and financial institutions from all around will first get their access through the CIBIL before they grant you any loan.

The CIBIL check which is done is based on the generation of the credit score. It is a three-digit number which works and ranges basically from 300 to 900. If you have a credit score below 300, then it is said that it is inferior. This is when the lenders will often time hesitates before granting you the personal loan. The next thing is if your score is around 900, then it is ideally the best credit score that you can have.

credit score range

(Source: NerdWallet)

Every month, all the banks and the institutions that grant your credit will check off your CIBIL score to understand how they can give you permission for certain things. This, in turn, helps the bank and the employees to judge your credit rating and choose the right applicants for granting the loan amount.

This way, they can get the repayment right off the bat without having to put a second thought to it. If the banks and the financial institutions are checking your credit score, then you need to make sure that your score should be above 700. If it is below that, then most of them won’t avail you to make usage of their service that they have.

Also read: Everything You Need to Know About Your Credit Score.

Steps to check off your credit score

Here are the steps you need to follow if you want to check off your credit score with the help of the CIBIL records. 

  1. You need to initiate the whole process by filing for a form which is present onto the official site of the cibil website. If you have filled up the way, then it will be right for you and easy for you to check off your credit score too.
  2. Now you need to enter your personal details. This is your name, your phone number, your address, etc.
  3. If you want to opt-out for the CIBIL Transunion score or which is also known as the CIR, you have to pay a nominal fee for the same.
  4. Once you have submitted your form, and with the nominal fees, your credit or your CIBIL score will be mailed to you.

For those who have not yet found to work out through the internet life, you can check your credit score with the help of the offline function too. You need to fill in the form of application and then bring in your documents to the official CIBIL office which is located in Mumbai, and your work will be done. It will help you to understand your credit score better.

Now here is some trick you need to know before you apply in for your credit score check through CIBIL. 

  1. Checking CIBIL score is FREE. You will be firstly offered a lot of paid options if you are trying to check off your score. If you want to check your score of once then you can click onto the No thanks option which is located at the bottom.
  2. If you don’t have your account, then you have to make one but If you do have then you can log in using your password and username. For those who are creating their account for the first time, they will be prompted to open an account with a pseudo password. Once you have opened the same, you will be mailed to change your password ASAP.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for credit cards online.

Check your credit score for good

If you ask me, it is not advised to check your credit score only once because it can fluctuate over time. Check your credit score every quarter or six months. So if you wish to keep an eye on your score, then there is a plan which you can select which is present onto the website. This way, you can save a check on them and help to maintain a good credit score with an overall well impact.

credit score

Credit Score – Everything You Need to Know!

Hello readers. Many a time, you might have heard that you should keep a high credit score. You should not default that EMI or else it will hurt your credit score.

An obvious question that may come to your mind is what actually is a credit score?  How are they measured? Moreover, why should you care whether your credit score is high?

Today, we shall be covering this hot topic in personal finance which we believe is central to addressing the financial health of any individual.

The topics we shall be covering are as follows:

  1. What is a credit score?
  2. Why is credit score important to you?
  3. How is credit score measured?
  4. Where can you get your credit report?
  5. How can you improve your score and how long does it take?

This is going to be a very interesting post, especially for the youngsters. Therefore, let’s get started.

1. What is a credit score?

Credit score is a metric used by banks and lenders to provide a comprehensive risk profile of a borrower. It is provided by four companies in India namely TransUnion CIBIL, Equifax, Experian and Highmark. The most popular agency of this being TransUnion CIBIL which provides the fabled CIBIL score.

The score is basically a reflection of your monetary habits derived from your transaction history upto three years which banks give these agencies periodically.

Also read:

2. Why is credit score important to you?


Every time you approach a bank for a loan or credit card, the bank tries to gauge the risk that comes along with your loan application. Gone are the days when your branch manager used to engage you in a long and mundane conversation asking about everything from your family background to your parents’ monthly pension before sanctioning the loan you asked for. Nowadays, they just send a mail to the credit agencies asking them for your credit score.

Upon receiving this request, the credit agencies aggregate your transaction data from multiple banks to ratify your profile into a scale of 300-900 to give a simple quantified data point for banks to make a judgment. After analyzing your score, the banks decide whether to accept or reject the application for the new credit card or loan, period.

The score bands used by banks for making an inference about your risk profile are as below

Credit score band Rating Comments
800-900 Excellent You have done great work on your score, make sure it doesn’t dip.
700-800 Good You most likely a couple of hiccups in your payments but that shouldn’t stop banks from rejecting your applications. You could improve your score through minor improvements
500-700 Average Although you may not be able to get loans immediately. You could improve your score within a matter of 2-3 months through planned action.
300-500 Poor You have several missed payments and defaults. Most banks would reject you right away.

Since a lot of things in life is unpredictable like the occurrence of disease or death of a family member, it would be beneficial to keep a healthy credit score so that one can always avail a line of credit when needed.

3. How is credit score measured?

The credit score may vary slightly due to the difference of calculation between each of the credit agencies but they more or less look at the same things to arrive at your score.

The following are the different parameters the credit agencies use to judge your score along with the weightage attributed to each of them.

Parameter Weightage
Credit History 30%
Credit Utilisation 25%
Credit Mix and Duration 25%
Other Factors 20%

Credit History: This is the most important factor in determining one’s credit score. The agencies look at one’s loan repayment data provided by the banks complete with the loan schedules, EMIs, late payments, and outstanding loans.

Credit Utilisation: This basically the percentage of loan one has outstanding to the total loan amount that can be availed. Ideally lower the loan one has outstanding the higher one’s score.

Credit mix and duration: The type of loan you avail also has a bearing on this aspect of one’s credit score, a higher amount of unsecured loan could lower credit score faster than an equivalent amount of secured loans. The reason for this being that secured loans are backed by property or any other asset that the bank can claim in case of default making it less risky than an unsecured loan.

Other factors: These include miscellaneous activities such as the number of hard inquiries made at the bank for loans and credit card applications. The banks often construe this as a sign of a person being under financial stress. This may have a negative impact on the credit score.

Also read: 10 Best Credit Cards in India [With Exploding Benefits]

4. How can you get your Credit Report?

As per the RBI directive in 2016, every customer is entitled to one free report from each of the credit agencies in a twelve month period. This means that you can get a total of four credit reports from all agencies together. We at Trade Brains advise that our readers avail this every quarter or at least semi-annually from different credit agencies.

You can avail your reports from the websites of the four credit agencies.  (TransUnion CIBIL, Equifax,  Experian, Highmark)

It is advisable that you don’t use a third-party website to obtain your credit reports since your confidential information could be stored by them.

5. How can you improve your score and how long does it take?

A seven-point roadmap to improving your score can be as shown below:

  1. Make all your EMI payments on time and close your outstanding debt as soon as possible
  2. Avoid making unnecessary credit limit extension or loan applications
  3. Reduce unsecured loans such as credit card loans and personal loans and pay them out as soon as possible
  4. Try to keep surplus cash in your accounts so that you can avoid the use of a credit card
  5. Keep checking your credit report for mistakes, if you spot them to take it up with your agency
  6. Avoid accepting settlements for your loans from banks even though your dues may be reduced significantly. The banks report this to credit agency which adversely affects your score
  7. Avoid being co-signee or a guarantor to friends or family who tend to habitually make late payments on their loans.

We believe that if you follow these steps, you should witness your score improve within the duration of three months to a year depending on your past scores.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for credit cards online.

Bottom line

Credit Score is the most important metrics banks and financial institutions use to gauge your risk profile. It would be beneficial for an individual to maintain a high credit score so that they can avail a line of credit in times of need.

Although not easy, a credit score can always be improved through planned and disciplined action on the side of an individual. We at Trade Brains hope our readers make the best efforts to maintain a high credit score.

Should You Use Credit Card

Should You Use Credit Card? Mystery Explained.

Should You Use Credit Card? – Pros and Cons of Using Credit Cards:

The credit card also bears the name of “debtless debt” which makes your catching up with your needs and requirements quite easily. In fact, this is the bottom-line for those who recklessly use credit cards for purchasing things.

The debate that revolves around the propaganda of using a credit card is endless with different opinions associated with different sets of people. Let’s break this rationally by seeing the possible alternatives of using a credit card:

  1. Paying cash – going the old school way,
  2. Using your debit card with instant balance deduction from the bank – a kind of digital money method.

In countries like India (the developing ones), we still have a way to go before we can use credit card everywhere. I am not talking about the online stores or any other huge retailer’s stores but at places like a parking lot or small stores, one can’t possibly choose to pay via a credit card. Therefore, using hard cash is the only way around. But we won’t only stop here stating this argument; let’s objectively view different pointers, pros, and cons of using a credit card as a payment method.

What is a credit card?

A credit card can be acted as a payment option which allows you to buy or purchase things or service on credit until a specific period of time. To put it in simpler words:

If (or not) one doesn’t have cash available at a specific point of time, one can make use of credit card to use the credits to pay at a later date. 

The keyword(s) to pull out of here is to “pay at a later date”. For revolving accounts, a minimum balance statement is due on every month end. On the other hand, for a charge card, the full balance to pay is due on every month end.

Various stores and merchants are now dismissing the use of cash as a mode of payment already. In fact, they only accept their fee through credit cards due to obvious security-related concerns. However, unlike the US, there is still a lot of scope remaining with hard cash in India. In fact, one can totally live without a credit card in India.

Credit Card – A kind of free cash? Or Not?

If you want to steer clear out of troubles, you must never consider credit card as a form of free cash. Remember, whenever you ask a bank for a loan, your credit history is checked thoroughly and it better not be bad to get your loan cleared. The amount you are using your credit card for has to be paid back in time to the bank or else you will be charged with heave penalties.

Thus, contrary to popular beliefs and no matter whatever people say, a credit card is not free money. If you don’t have the money right now, you should never charge your credit card then. Otherwise, it would be very tough for you to repay the amount in time.

Now that you have understood the basics of the credit card, the next big questions- Should you use credit card? Before jumping to any conclusion, first, let’s discuss the pros and cons of using a credit card.

Also read: #11 Best Passive Ways to Make Money While You Sleep.

Should You Use Credit Card?

Credit Card Pros – The Green Signal

1. Security and Convenience – There’s always a dilemma of “how much to withdraw from ATM?” No matter what, either the money you withdraw is going to be huge that there will always be a fear of theft or else it would be very inconvenient to withdraw money from ATM time and again because you ran out of money. Enter, Credit Card – a convenient mode of payment. You could always leave your money in the safer hands of the bank and can use your card for your purchases.

2. With Credit Card comes Big Rewards – As much as you use your credit card, the points on your card keeps increasing. Additionally, you can get other cash backs on several purchases, gas rewards. Many credit cards offer you free insurance on your air ticket, bus ticket, and hotel payments. Whatever that you save on your hefty payments can be considered as “incoming money” right?

Also read: 10 Best Credit Cards in India [With Exploding Benefits]

Credit Card Cons – The Red Flag

1. The Free Money Dilemma – With a privilege of having to pay back later, we always end up spending way more than we should. That is where the banks are earning. Always remember, the exciting cash backs, reward points and other benefits that come with credit cards are always issued while keeping the profitability factor in mind.

2. Hurts your Credit Score if Abused – If your credit score is abused, you won’t be able to earn many credits or rather, it would be difficult. This brings your heavy responsibilities of balancing the use of credit card to a normal extent. Moreover, there are times when the credit card issuers don’t clearly state the terms and conditions and trap the users. Be the smarter one and ask for it in the beginning to specify all the terms and conditions.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for the best credit card online.


Obviously, there’s no free meal in this world. If you are using a credit card today, you have to pay back later. However, the use of credit cards provides a lot of convenience to its users. Further, it can be handy in case of a tight budget where it’s better to use credit than to ask for debt/loan.

5 Things You Should Know Before Getting Your First Credit Card

5 Things You Should Know Before Getting Your First Credit Card.

5 Things You Should Know Before Getting Your First Credit Card:

Contrary to popular beliefs, the credit cards are not to be mistaken with “free cash” or else be ready to fall into the trap of endless repayment and paying penalties.

A Credit Card, if used rationally and in a balanced way, can be a huge gift for mediocre spenders as it allows you to spend on your necessities even if you are practically broke. However, be sure that you will be able to earn cash to repay the amount in time or else there will be penalties in your name. Looking for benefits associated with credit cards? Let’s help you out with a few scenarios:

1. Benefits Associated With Credit Cards:

  1. If you are not earning (or will not be earning) for a while, you can always pay your bills and pay for your necessities using a credit card assured if you can pay for the amount later.
  2. There are multiple rewards and cash backs that come with the use of credit cards on bill payments and even for shopping.
  3. Various credit card issuers provide you with insurance on your flight tickets and bus tickets.
  4. With a good credit history, you can apply for loans easily in any bank.
  5. Convenience is the middle name of a credit card as it allows you to pay for anything through a card and without requiring you to withdraw cash from ATM every now and then.

But with benefits, there come responsibilities and in this case the wisdom of rational spending. Let’s know things about credit cards to know more about it.

2. Credit Card Interest Rates in India

The interest rate varies from bank to bank in India. However, ICICI Bank is the leading issuer of credit cards in India. The interest rate keeps falling in the range of 1-3% for almost every bank that issues credit cards. Apart from the interest rate, there are other benefits associated with credit cards which have to be kept in mind before purchasing a credit card. For example:

Some banks offer free insurance on ticket bookings through credit card and others provide various cash backs on bill payments. These are a few factors that influence the mind of a buyer. The interest rate depends on the following factors:

  • Repo Rate: Repo rate is the rate at which the RBI lends money to the commercial banks of India.
  • Reverse Repo Rate: The rate at which the RBI borrows money from the commercial banks of India.
  • Repo rate directly influences the interest rate on credit cards whereas the reverse repo rate inversely influences the rate of interest.
  • Prime Lending Rate: Various banks fix the interest rate on a credit card keeping in mind the current prime lending rate.

3. Fees on Credit Cards:

There are times when a credit card issuer (bank) does not clear the terms and conditions for a credit card. The terms and conditions specify various fees that are to be charged before issuing a credit card to the holder. The fee structure is as follows:

  1. Joining Fees: These days, many credit card issuers are issuing credit cards without associating any joining fee to it which means that a holder can gain access to a credit card without having to pay any fee in the beginning.
  2. Annual fees: The free (or paid) credit cards issued are associated with an annual fee which has to be paid on a per year basis. Again, the annual fee to be paid varies from one bank to the other.
  3. Interest Rate: The main pointer through which a bank earns on credit cards is the interest rate that it charges on these cards. Generally, the interest rates vary from 1-3% in India.

4. Minimum Payment on Credit Cards:

In layman terms, the Minimum Payment is a scheme which allows you to settle a minimum amount on your overall (monthly) credit card bill if you are not able to pay the entire bill at once. However, the remaining balance which is carried forward for the next month is associated with a higher rate of interest.


  • Save you from a penalty in case of “partial payment”.
  • Saves a bad mark on your credit history.


  • Interest-free credit period is not provided in case of Minimum Payment
  • Keeps you trapped in an endless loop of repayment.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for the best credit card online.

5. How Credit Cards Affect Your Credit Score?

The credit card can hugely determine your credit score as it defines your immediate decisions and management of your debt. If you plan to balance out your spending every month, credit cards can have a huge positive impact on your credit score.

  • Your Credit Mix accounts for 10% of your FICO score
  • Closing Credit Card Accounts can hurt your credit score
  • Your Payment history (or late repayment) can hurt your credit score up to 30%
  • The amount of debt you carry can affect 30% of your FICO score.

Also read: How to Check Your Credit Score?