According to the Reserve Bank of India, more than 50 million credit cards were in operation in India last year. In addition to this, India saw a 27% growth in credit card circulation from 2018 to 2019.

The rising popularity of credit cards can be attributed to many of its attractive features and benefits.

Individuals can accumulate reward points on purchases with credit cards which can be redeemed for discounts on several purchases and other transactions.

However, despite the popularity, some individuals still hesitate before opting for a card due to the significant credit card interest rate.

When do credit cards charge interest?

Credit cards come with a credit limit decided by the lending institutions based on a borrower’s income and repayment capacity. Users can carry out as many transactions as they want within this limit.

However, at the end of the billing cycle, applicants need to repay the amount that they owe to the credit card company. If they are unable to pay back the whole amount before the due date or pay only the minimum amount due, then interest will be charged. Applicants should keep in mind that doing so can lead to a debt trap.

The period before credit card companies starts charging interest is known as the grace period, which is usually 20-25 days.

The interest rate on your credit card is known as APR or annual percentage rate. There are three types of credit card interest rate – fixed, promotional, and variable interest rate. These are discussed in detail below –

  • Fixed interest rate – As the name suggests, this type of interest rate stays the same for an extended period. It may change in the future; however, the card company is required to notify the user 45 days before. Fixed interest rates are generally higher compared to variable interest rates.
  • Promotional interest rate – Interest rates that are only offered during a specific time are called promotional interest rates. For instance, some financial institutions offer credit cards at zero interest for a specified period. Nonetheless, customers should be wary of such interest rates and read through the fine print carefully.
  • Variable interest rate – Variable interest rates are linked to an external benchmark. These rates may increase or decrease at a certain point in the future; however, lending institutions do not have to notify the user.

Credit card statement

The credit card statement is sent to you by the company at the end of every billing cycle. You can check the following in this document – 

  • Minimum amount.
  • Total amount.
  • List of the transaction.
  • Other related information.

You must know how to read your credit card statement correctly so that you can locate errors or fraudulent transactions. The statement can be availed via offline or online modes.

Credit card eligibility

Apart from interest rates, applicants should also know about the eligibility for a credit card. The eligibility criteria are as follows –

  • Applicants should be within the age of 25 – 65 years.
  • He or she should have a CIBIL score of 750 or more.
  • They should not have defaulted in any of their previous repayments.
  • Applicants should also be a resident of India.

Some credit card companies may have other eligibility criteria apart from the ones mentioned above. If you meet all these, your application will be approved quickly. Consequently, you should know the ways to check your credit card application status.

When applying, make sure to look for all the features and associated charges. One can also opt for credit cards like Bajaj Finserv RBL Bank SuperCard which offer the benefits of four cards in one.

The company also provides pre-approved offers that facilitate the quick and hassle-free credit application process. Apart from credit cards, pre-approved offers can be availed on multiple other financial products like business loans, personal loans, etc. You can check your pre-approved offers by entering a few necessary information like your name and contact information.

Applicants should keep in mind that responsible usage will help them to not only avoid credit card interest rates but also save a substantial amount annually. They will also be able to improve their credit score.