Credit cards have become an important part of modern society’s life. Just like technological developments, credit cards are very helpful for daily activities. Especially for things relating to financial matters.
The main benefit of a credit card is a means of payment. But frequently this facility is misunderstood because it is prone to be misused as a debt tool.
Therefore, adequate knowledge about credit cards is needed in order to be able to get as many benefits as possible without worrying about the risk of being in debt. The following will be conveyed information about credit cards from A to Z to get to know their benefits.
What is a Credit Card?
A credit card is a card-based payment instrument (APMK) that can be used to make payments in economic activities, such as online and offline shopping and cash withdrawals.
In transactions, payment fees will be met first by the card issuer. Cardholders must pay the payment at the agreed time through repayment at once or in installments.
In general, credit cards are similar to debit cards. The only fundamental difference is the source of funding.
Funds contained in a credit card is an outstanding balance with a certain limit in accordance with the card’s features. While the funds on the debit card correspond to the number of accounts linked to the card.
The benefits of credit cards are also different. There is a credit card promo that applies to merchants or parties who work with the card issuer. For example in the form of discounts, cashback, or installments with 0 percent interest.
In addition, there are points that can be generated from each transaction using a credit card. These points can later be exchanged for certain prizes according to the card-issuing bank’s policy.
Who Needs a Credit Card?
The benefits of a credit card are commensurate with the risks that accompany it. That is why it is important to fully understand whether we really need this card.
All people who often make real payment transactions need a credit card. For example, mothers who routinely shop at certain supermarkets, young people who often shop online, or those who like to travel around the country.
But there is a tendency for people to misuse something that has excess benefits. Medicines that are beneficial in the medical world, for example, are often sold for personal enjoyment to the point of being addicted.
In the case of credit cards, the cost of transactions that must be paid in the future is a risk that is often overlooked. Inevitably, many credit card holders end up having problems with debt to banks due to this tendency.
For that, we need to ask ourselves first. Are we going to be a responsible credit card holder or not? If the answer is yes, then we really need this payment instrument.
What are Credit Card Fees?
The obligations of credit card issuers are regulated by most banks. The regulation can be updated by the issuing bank in accordance with the latest situation and conditions.
We as credit card consumers must also understand our own rights and obligations. The main obligation of the consumer is certainly paying off credit card bills.
But there are some things that are often forgotten, especially regarding credit card fees. Among them:
1. Annual fees
This fee is charged annually to credit cardholders. But it’s usually free for the first year. The amount varies, depending on credit card facilities. This fee can be paid using points generated from each credit card transaction.
2. Late fees
These costs occur only if we are late paying the bills according to the agreed time.
3. Interest costs
We must pay interest if we use this card for payment transactions on credit or installments. Usually, Banks have rules that set maximum limits on credit card interest.
4. Cash withdrawal fee
Credit cards can be used as a debit card to withdraw cash at an ATM. But there are costs that come with using an ATM for withdrawing money with credit cards, in contrast to debit cards.
5. Overlimit costs
Some banks apply over-limit fees or excess credit card limits. But there are also those who directly lock the credit card once the limit is reached so that the card cannot be used until the bill is paid.
6. Bill information costs
Billing information will be charged when we check how many bills that month, usually via SMS or e-mail. The more often you request information, the greater the cost.
How to get a credit card?
Everyone can get a credit card as long as it meets the specified requirements. Banks as credit card issuers apply more or less the same conditions for customers who want to get a credit card.
These requirements include:
– Identity card
– Minimum age 21 years and maximum 60 years
– Taxpayer identification number
– Proof of income
– Current account / transaction
statement for the last 3 months – Job certificate, business or profession
These requirements do not include the minimum income limit pegged to determine how many credit card limits can be given. The higher the income, the greater the card balance limit.
This is important because the limit is related to one’s financial ability. If someone has a credit card limit above the amount of his income, the risk of default will be greater. Because the temptation to use a credit card for transactions can appear uncontrollable. This condition is dangerous when there is not enough income support to pay off the transaction.