Everything You Need to Know About Credit Cards

31 December, 2024

Synopsis

• A Credit Card is a financial instrument you can apply for to manage your payments.
• Credit Card comprise your name, a 16-digit card number, a CVV number and an expiry number.
• Creditors do not charge interest if you repay your Credit Card bills on time.
  
  

There could be times when you may need to purchase something but your account balances may be low. While you may be expecting funds in your account a few days later, you may also be unable to delay the purchase. At times like this, a Credit Card comes in handy. This financial instrument helps you manage all kinds of purchases. But there’s a lot more to Credit Cards than meets the eye. Here’s all the vital Credit Card information you need to know if you intend to apply for one.

What is a Credit Card?

A Credit Card is a plastic or metallic card that you can use as a mode of payment to pay for your various expenses on online and offline portals. When you use or swipe this card, your Credit Card provider or creditor pays the merchant on your behalf. The creditor then sends you a detailed, itemised bill for the expenses incurred on the card later, on a fixed date each month.

You must pay off your Credit Card dues on or before the stipulated due date, which is also fixed according to your billing cycle. Paying your Credit Card bills on time saves you from paying interest but failure to do so can result in you having to bear high interest costs. Non-payment also impacts your credit score, which in turn affects your chances of procuring loans and other credit facilities.

Important Credit Card Details and Facts

A Credit Card comprises various components, which include the following:

• The Credit Card Number

The Credit Card number is the 16-digit number embossed or printed on the card. Each number represents something which assists with identifying or validating the card, and follows a specific structure. Of the 16 digits, the first six digits are called the Issuer Identification Number (IIN) which help identify the card issuing entity (Visa, MasterCard, etc.) For instance, cards that start with ‘4’ are issued by Visa, whereas those starting with the ‘2’ or ‘5’ are issued by MasterCard.

The numbers placed between the 7th and 15th position represent the bank from where the card is issued and the specific Credit Card account number issued by the card provider. The last digit of the Credit Card number is called the check digit, serving as a validation code that ensures your Credit Card number is accurate.

• The Cardholder’s Name

Another important piece of Credit Card information is the cardholder’s name, which is typically embossed or printed on the front or flip side of the Credit Card. You might need to enter your name, as printed on the card when you shop online. Sometimes, when you shop offline at a store, the merchant may ask you to provide an ID proof document along with the Credit Card to prove that you are the rightful card owner. As such, when you apply for the card, you must ensure you have your name printed in the same way as it is on your ID proof documents.

• The Credit Card Expiration Date

Depending on your bank, you can get Credit Cards with 3 or 5-year validity periods. You can assess the validity of the card by looking at the Credit Card expiration date. The date is typically embossed in the MM/YY format on the card and you need to enter it in the same format when you shop online. A crucial Credit Card detail to know is that when your Credit Card draws close to its expiration date, your creditor automatically issues and sends you a new card without you having to raise a request.

• The CVV or Security Code

The last piece of Credit Card information that is just as crucial as all other aspects is the Card Verification Value or CVV code, also called the security code. The CVV comprises 3 digits (4 in case of American Express Credit Cards) and is usually printed near the magnetic strip and the signature box on the flip side of the card. If you often shop online, and your card number is already saved on the online portal, you only need to input the CVV number and an OTP to authenticate a transaction.

Other Vital Credit Card Details To Know

Besides the above mentioned Credit Card information, you can find some details by giving your card a cursory glance. For instance, every card comprises the issuing bank’s logo. The credit entity’s logo like Visa, MasterCard, Discover, American Express, Diner’s Club International, etc. is also apparent. Additionally, there’s a small chip comprising your card number, a magnetic strip safeguarding your card information, and a signature strip on which you must sign to validate your card.

Sometimes, the card may have a Wi-Fi like symbol to represent that it is a contactless card. In such cases, you simply need to tap the card instead of swiping and inputting your 4-digit secret code. You can tap the card only if your total bill value is up to a specific amount, as determined by your bank.

Credit Card Terminology

As a Credit Card user, you should u familiarise yourself with some critical card-related terms, such as:

• Billing Cycle:

The billing cycle represents the length of time between each Credit Card statement generated by your creditor. It simply means that your creditor sends you a bill every 30 days.

• Billing Date

Your creditor typically generates your bill on a fixed date each month and sends it to you via post or email. The date is known as the billing or statement date.

• Payment Date

After generating the bill, the creditor gives you an interest-free period of 15-20 days to make arrangements to pay your Credit Card bill. This date is known as the payment date.

• Minimum Payment Due

To continue using your Credit Card, your creditor expects you to pay the minimum amount due, which is typically 5% of your bill. This is the lowest amount you can pay to keep your credit account active.

• Interest on Credit Card

If you pay only the minimum amount due or if you fail to pay your total bill on or before the due date, the creditor levies interest on the outstanding amount. The interest keeps compounding with every partial or unpaid bill, leading to higher outstanding dues.

• Credit Limit

You are only allowed to spend money up to a certain limit on your Credit Card. This limit is called the credit limit, and it is determined by your creditor based on your income. The limit is typically higher than your monthly income, and revised periodically based on your card usage.

• Cash Advance

If you are strapped for cash and need to borrow some, you can use your Credit Card at an ATM and withdraw cash up to a prescribed limit. This is known as a cash advance, and unlike your other interest-free Credit Card charges, you must pay interest when you borrow cash on Credit Cards.

Apply for HDFC Bank Credit Cards Online

Having a Credit Card truly proves beneficial. With HDFC Bank, you can choose from an array of Credit Cards. Each card is designed keeping in mind the various lifestyle requirements of our customers. For instance, you can find exclusive travel, shopping, entertainment, and food-specific Credit Cards. We also offer special high-end cards with attractive rewards. You can visit our website to get all the necessary Credit Card information.

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.