Credit Cards Disclaimer: Why does a Bank Offer Credit Card?

Please use credit cards responsibly. Don’t opt for it as a free source of money that you can spend as much as you want.

Banks offer credit cards for the following reasons:

  1. To earn from merchant fees against your transactions.

  2. To make ppl spend more than their budget so that they don’t get to repay the full amount and opt for EMIs, and they can earn interest.

  3. To make ppl fail to pay dues on time and earn from late fees, and they can earn from it.

  4. To filter out ppl who pay dues on time and offer them higher credit lines, better loans, etc. with higher interests associated with it, so that they can again earn from (2) & (3).

Often banks come up with Lifetime Free Credit Cards to hook a person into using credit cards.

The bank’s ultimate aim is to earn money while giving back a part to you as cashback etc. which they tie up with partner companies so that you purchase from them more than others.

If you fail to pay your dues on time, it will first affect your credit scores which will automatically bar you from a new line of credit (such as loans). If you just pay the minimum due, it can pile to 300% or more payable interest in just years.

If you fail to pay even the minimum dues, banks may send you legal notices which might financially trouble you / your family. You don’t want that.

Buying on EMI is also not suggested in general. You should always buy products that you can afford to buy again if needed. EMI creates a habit of opting for things 3x-5x higher than your usual budget just because you get 6-24 months of time to pay for it.

To make the most out of any credit card, make sure you only take cards that offers significant discounts against your purchases, have a rewards scheme from partners where you buy from, and where you can save some decent bucks while cash payers won’t. You should also look at the card fees, and try to grab cards with a low fee/lifetime free criterions.

Always read the fine print of every credit line (loans/cards) that you are applying for. Check their reviews online and compare them with other available alternatives. It would help you make better decisions in the end.

8 Major Credit Card Mistakes that many people fall for:

Image Credits: 1PageFinance.

Thanks for reading. Peace!:v:|

TLDR: Buy only what you can afford. Be responsible and pay dues on time.