Credit card faqs

Minimum amount due is the figure that has to be paid to the bank for the purpose of ensuring that you do not fall under the defaulter category with respect to the card payment. It serves as an indication to the bank that though you might not be able to pay the full amount presently, you intend to pay it when possible.The minimum amount due is usually a certain percentage of the total amount that you have to pay. This is around 5%-10%, and it can vary across cards.If you pay the minimum amount due then you automatically slip into the interest rate cycle, and the interest will start accumulating on the remaining outstanding amount that is yet to be paid.

One can make the best use of a credit card is by enjoying a larger credit period on it, thus using money for free. If the expense is made immediately at the start of the billing cycle then the due date for payment will be long time away, as long as 7-8 weeks. On the other hand, some expenses made on the last couple of days of the billing cycle will require a payment within a couple of weeks itself and this would not be the best use of the credit period available for a cardholder.

A billing period in a credit card is the time period for which a particular bill is generated. This is usually one month and it will include a list of all the items that have witnessed the use of a credit card. The billing date is specified as a particular date, say the 15th of a month and this enables a credit cardholder to know the various expenses and when they will come up for payment. If an expense falls in a new billing period then it will come up for payment in the next month.

In case of a credit card the main charges are interest charges to be paid for not paying the amount on time. In case the amount is paid by the due date there is no expense for the cardholder. In this case, he/she is using the amount of funds provided by the bank for a certain period of time without any cost. In case of a debit card, a person uses his/her own money and obviously there is no interest to be paid here. If there is adequate fund available with a person and he/she does not want to run the risk of missing the payment then the use of a debit card is preferable. On the other hand, when funds are not present immediately and still the individual wants to use money for making expenses then he/she can use credit cards. In effect a person can use both debit and credit cards to meet his/her specific requirements. It need not always be a decision of using just one type of card under all circumstances.

This is a very important thing you need to understand while using your credit card. For example, your billing cycle is on the 1st of every month and you get 50 interest-free days to pay your bill. If you make a purchase on the 2nd of the month then you will have until the 20th of next month to pay the bill without being charged any interest on it. But if you make a purchase on the 29th of the month you will still have to pay the bill on the 20th of the next month. Hence, in a way in the second instance your interest-free days are reduced to 21 days only. What this means is, you will get a minimum of 20 interest-free days on your purchase AT LEAST but you can obviously increase them if you make your purchases in the initial stages of your billing cycle.

Yes, you should get credit card insurance. This will insure you for a certain amount of money in case your card is lost, stolen or misused.

All you need to do is go to the issuing bank with a photo ID (for example, a passport), or call customer service and answer a few personal questions regarding your account so that they can confirm your identity over the phone. Your PIN will then be reset by them and you can start using your card again with the new PIN.

Yes, most credit cards can be used throughout the world.

If you cannot avoid delaying your repayments, at least repay the minimum amount due on your outstanding balance every month. This is because the late payment fees are generally very high, say around 15% of minimum payment due or 2.5% of the total outstanding balance. But remember, late payment fees are charged only after the interest-free period is over.

* Once you inform the credit card company of the loss of your card, you will not be billed for the purchases made on your card thereafter. Then the liability of any purchases made on your card will lie with the company.
* But you will be billed for any purchases made fraudulently on your card before you report its loss to the company.
* Hence, it is very important you notify the respective department of the credit card-issuing institution about the loss of your card and make a note of the time, date and person you notified to. (As this would be the evidence on your part that you notified the company of the loss of your credit card.)