Many times you may feel the need for liquid cash in your life to pursue some of the most important issues. The best and easiest way to get the required money is to get a loan from any financial organization. But you don’t get a financial organization near you to provide a loan to meet the immediate need. Moreover, the agencies take time to approve your loan application. Here is the utilization of the credit card from which you can take an immediate loan to serve your purpose. In this article you will come to know about which credit card is best for you.
What is a Credit Card?
A credit card is much similar to a debit card where you can utilize money from a pre-approved loan for any of your purposes. It is a payment card that is issued to the cardholder so that he can pay for any goods or services. The credit card consists of a promise by the cardholder to pay the utilized amount back to the agency with the interest amount as per the rate of interest decided. The agency or the company that issues the card gives a limit of the amount which is called the line of credit to the holder through a revolving account. This is simply borrowing money from the agency through the card for any of your urgent needs. The good thing about the card is you don’t have to keep a pre-deposited balance in your account to use.
Parties Involved with Credit Cards
Though it is a matter of a borrower and a lender, still there are several parties involved in this matter. The best combination features will indicate which credit card is best.
A cardholder is a person who uses the card to borrow money.
- Card Issuing Bank
The financial organizations which are issue the card to the cardholders. The bank or the institution charges the interest for the money borrowed from them.
The person or the company that accepts the card for the payment for the things bought from them is considered as the merchant.
- Acquiring Bank
The bank or the financial company that accepts the payment from the cardholder through the card is the acquiring bank.
Features that You should Look for in a Credit Card
The credit cards have different features that are given to make the transactions smooth for the users.
- Credit Limit
All the credit cards put a limit on the amount up to which you can borrow money from them. Each credit card gives you a limit depending on various factors of your financial health. The limit of the maximum balance includes the amount of purchase; transfer of money through the card, the advance was taken in the form of cash and finance charges. On exceeding the credit limit you may be charged.
- Balance of Money
It is the total amount of money you have used through your purchases, fees paid and finance charges. More the amount you use at a point of time, the less is the remaining balance in your card. You have to pay the interest in the stipulated rate of interest for the time you owe the money.
The Annual Percentage Rate is the interest rate charged on the amount that you have used but not paid till date. The APR is charged only after the grace period. Different credit cards have different types of APR and it also depends on the slab of the amount that you have used at a particular time.
- Grace Period
It is the allowance of time within which you have to pay the utilized amount to the credit card agency. After the grace period is over, then you are charged at a particular rate.