Banking
Credit Card
Also known as: Charge Card
A payment card that allows borrowing money from bank up to a predetermined limit for purchases.
Detailed Explanation
Credit cards provide a revolving line of credit that allows cardholders to make purchases and pay later. Key features include interest-free credit period (20-50 days), reward points, cashback, and EMI conversion options. Responsible usage helps build credit score while misuse can lead to debt trap due to high interest rates (24-48% annually).
Related Terms
Credit Limit
The maximum amount a cardholder can borrow on their credit card at any given time.
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Credit Utilization
The ratio of current credit card balances to total available credit limits, expressed as percentage.
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Interest-Free Period
The grace period during which no interest is charged on credit card purchases if full payment is made.
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