Question

If you have a credit card with a ₹ 100,000 credit limit and you buy something worth ₹ 20000, your credit card balance will now be ₹ 20000. You can choose to pay this off immediately, or you can wait until your billing statement arrives. If you don’t pay the full ₹ 20000 by the due date, you’ll be charged interest on the remaining balance.

Answer 1

1. A credit card is a financial instrument issued by a bank or credit card company, enabling the cardholder to access credit up to a set limit and make purchases.
2. To obtain a credit card, one does not need to have any cash on hand. Instead, it is a kind of overdraft facility.
3. Using a credit card, the cardholder can purchase products and services. He continues to deposit the funds utilised in accordance with the bank’s agreement.
4. Since the bank extends credit to the cardholder up to a certain limit, the account balance is not required.