Falcon Credit Card Overview

Full-stack embedded payments & credit platform

Overview - Credit Cards, features, business use-cases

What are credit cards?

A credit card is a payment card that allows the cardholder to borrow funds from the issuer, typically a bank or financial institution, up to a certain limit. The cardholder can then use the card to make purchases or withdraw cash, and must pay back the borrowed funds, plus interest, at a later date. Credit cards are widely accepted as a form of payment at merchants, and can also be used to make online purchases. They can be a useful tool for managing finances, but it is important to use them responsibly and pay off the balance in full each month to avoid accumulating debt.

Who are the users of Credit Cards?

Generally, anyone who is of legal age and has a sufficient credit history can be issued a credit card. In most countries, the legal age to apply for a credit card is 18 years old, although some issuers may set a higher age requirement. In order to be approved for a credit card, individuals usually need to have a good or excellent credit score, which is a measure of their creditworthiness. This is usually determined by their credit history, which includes information such as their past credit card and loan payments, as well as their income and employment status. Additionally, credit card issuers may also review an applicant's criminal history, credit utilization and other factors to determine their eligibility.

Types of Credit Cards

Individual Credit Card: Individual credit cards, also known as personal credit cards, are credit cards issued to an individual for their personal use. These cards are not linked to a business or organization, and the credit limit and rewards are based on the creditworthiness and financial history of the individual cardholder.

Corporate Credit Card: A corporate credit card is a type of credit card that is issued to a business or organization for the use of its employees. These cards are often used for business expenses such as travel, office supplies, and other business-related purchases.

Variations of Credit Cards

There are several types of credit cards available, each with its own set of features and benefits. Some of the most common types include:

Standard credit cards: These are the most basic type of credit card and are often issued to individuals with good credit. They typically have a fixed APR (annual percentage rate) and offer rewards or cash back on purchases.

Rewards credit cards: These credit cards offer rewards such as cash back, points, or miles for every dollar spent. They can be tailored to specific interests such as travel, dining, or shopping.

Balance transfer credit cards: These credit cards allow individuals to transfer high-interest balances from other credit cards to a new card with a lower APR.

Secured credit cards: TA secured credit card is a type of credit card that is backed by a security deposit that the cardholder makes with the issuer. The deposit acts as collateral for the credit card, and the credit limit is usually set at the amount of the deposit. This type of credit card is intended for individuals with limited or poor credit history, as they are considered less risky for the issuer.

Unsecured Credit Card: An unsecured credit card is a type of credit card that is not backed by a security deposit. Instead, the credit limit is determined by the creditworthiness of the cardholder, which is typically based on factors such as credit score, income, and credit history. This type of credit card is intended for individuals with good to excellent credit history and considered to be less risky for the issuer.

Charge cards: These credit cards require the full balance to be paid off each month. They often come with higher credit limits and more exclusive rewards.

Business credit cards: These credit cards are intended for use by small business owners and entrepreneurs. They often offer additional features such as expense tracking and the ability to assign employee cards.

Student credit cards: These credit cards are intended for college students and are designed to help them establish credit. They often have lower credit limits and special student-specific rewards.

This is not an exhaustive list, but it gives an idea of the different types of credit cards available. It's important to understand the features and benefits of each type of credit card and choose one that best fits your needs and spending habits.

### Credit Card Limits

Credit card limits are determined by the credit card issuer and are based on the creditworthiness of the individual. The creditworthiness is usually determined by factors such as credit score, income, employment status, and credit history.

Typically, credit card limits in India range from a few thousand rupees to a few lakhs of rupees. Some premium credit cards may offer higher limits to individuals with excellent credit.

In India, the Reserve Bank of India (RBI) has set a limit on the amount of credit card debt that an individual can carry, which is currently set at 50% of the credit limit. This means that if an individual has a credit card limit of Rs. 1 Lakh, they can only carry a maximum debt of Rs. 50,000 at any given time. Additionally, the RBI has also mandated that credit card issuers cannot charge interest on amounts above the credit limit, and also put a cap on late payment charges

It's important to note that credit card limits are not set in stone and can be increased or decreased based on the individual's credit history, payment history, and credit score. It is always a good idea to manage your credit card limit responsibly and make payments on time to maintain a good credit score.

Business Use Case - Credit Cards

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

Purchasing goods and services: Businesses can use credit cards to make purchases from suppliers and vendors, making it easy to manage cash flow and track expenses.

Travel and entertainment expenses: Businesses can use credit cards to cover the costs of travel, lodging, and meals for employees on business trips.

Employee expense management: Many corporate credit cards come with features such as employee cards, online expense tracking, and detailed reporting, which can help businesses keep track of employee expenses and improve expense management.

Building credit history: By using a corporate credit card responsibly, businesses can build a credit history, which can help them qualify for larger loans or lines of credit in the future.

Earning rewards: Some corporate credit cards offer rewards such as cash back, points, or miles, which can be used to offset business expenses or provide other benefits.

Managing cash flow: Credit cards can be used to manage cash flow by allowing businesses to make payments over time, instead of having to pay for expenses all at once.

Simplifying payments: Credit cards can simplify payments and make it easy to pay multiple vendors at once, rather than having to write multiple checks or transfer funds individually.

It's important to note that businesses should use credit cards responsibly, paying off the balance in full each month and keeping track of expenses to avoid overspending or accumulating unnecessary debt. Additionally, it is important to read the terms and conditions of the card carefully to understand the fees, interest rates, and rewards offered.