Overview

💳 What is a Credit Card?

A credit card allows users to borrow funds from an issuer (typically a bank or financial institution) up to a predetermined limit. Cardholders can make purchases or withdraw cash, repaying the borrowed amount with applicable interest. Responsible usage involves timely repayments to avoid debt accumulation.

👥 Who Can Use Credit Cards?

Individuals of legal age (typically 18 and above) with a satisfactory credit history are eligible for credit cards. Approval factors include:

Credit score and history
Income and employment status
Credit utilization patterns

Issuers may also consider additional criteria to assess creditworthiness.

🗂️ Types of Credit Cards

Individual Credit Cards: Issued to individuals for personal use, with credit limits and rewards based on personal financial profiles.
Corporate Credit Cards: Provided to businesses for employee use, facilitating business-related expenses like travel and office supplies.

🧩 Credit Card Variations

Variations	Description
Standard Credit Cards	Basic cards with fixed interest rates, often offering rewards or cashback.
Rewards Credit Cards	Offer incentives like points, miles, or cashback for specific spending categories.
Balance Transfer Credit Cards	Allow transferring existing high-interest balances to a card with a lower interest rate.
Secured Credit Cards	Require a security deposit, suitable for individuals with limited or poor credit history.
Unsecured Credit Cards	Do not require a deposit; approval is based on creditworthiness.
Charge Cards	Require full balance payment each month, often with higher limits and exclusive rewards.
Business Credit Cards	Designed for small business owners, offering features like expense tracking and employee cards.
Student Credit Cards	Tailored for college students to help build credit history, usually with lower limits and student-specific rewards.

💰 Credit Card Limits

Credit limits are set by issuers based on factors like credit score, income, and repayment history. In India, the Reserve Bank of India (RBI) mandates that individuals can carry a maximum debt of 50% of their credit limit. For example, with a ₹1,00,000 limit, the maximum allowable debt is ₹50,000. Interest cannot be charged on amounts exceeding the credit limit, and late payment charges are capped.

💼 Business Use Cases

There are several business use cases for credit cards, including:

Purchasing Goods and Services: Streamline procurement from suppliers and vendors.
Travel and Entertainment Expenses: Manage employee travel, lodging, and meal expenses efficiently.
Employee Expense Management: Utilize features like employee cards and online expense tracking for better oversight.
Building Credit History: Responsible usage can enhance a business's credit profile, aiding in future financing.
Earning Rewards: Leverage cashback, points, or miles to offset business expenses.
Managing Cash Flow: Use credit to spread out payments, improving liquidity management.

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