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Credit Cards Unveiled: Understanding How They Work and How to Make the Most of Them

What is a credit card? A credit card is a tool that is issued by a bank and enables its holder to borrow money to pay for services and products at businesses that easily accept credit cards.

Credit cards require the cardholders to repay the borrowed funds, plus applicable interest if there are any, and other agreed-upon fees, in full or over time, either by the billing due date or by the later date.

In order to offer a co-branded credit card, Fi.Money has partnered with Federal Bank, a legitimate credit card issuer.

Introducing the 5% Card. A credit card that offers incentives for spending! Your rewards will also alter over time as your purchasing habits do. Every time you spend on any of India’s top 21 brands, you can earn accelerated rewards of up to 5X.

The right credit card use can make it a highly useful financial tool. Your credit score can increase if you make consistent, on-time payments. Also, some cards reward purchases or even provide a temporary 0% interest rate on balance transfers from other credit cards.

However, monthly payments and accumulated interest can become an issue if your credit-related spending becomes out of hand.

The credit card issuer may additionally provide the cardholders with a separate cash line of credit in addition to the predetermined credit limit, allowing the users to borrow money in the form of cash that can be accessed through any bank teller machines, ATMs, or credit card convenience checks.

Often, these cash advances come with unusual conditions, like no grace period and higher interest rates.

How do credit cards function?

A credit card functions similar to a loan, but you get a predetermined credit limit instead of getting money upfront. The amount you can spend before you are required to pay back the lender is usually provided by the credit limit set by the authority.

Credit cards offer several advantages:

  1. Using a credit card allows one to make a sizable purchase that can be paid off over time in a series of tiny installments.
  2. A credit card is generally safer to carry than cash and is highly acceptable.
  3. Having a credit card can assist you in improving your credit score.
  4. You can get extra cashback, better interest rates, and many other great deals if you have a strong credit score.

Here are some guidelines for using credit cards responsibly without running the risk of getting into debt:

Choose a credit card that best meets your needs for spending

Because each credit card offers different perks and rewards, buyers must select a card that will give them the most advantages. Thus, determine your spending habits first, and then search for credit cards that best suit your demands.

Make use of free EMIs

By collaborating with numerous merchants, many lenders provide cost-free EMIs. No-cost EMIs are less complicated than other types of loans and can help one save money on interest. Nevertheless, processing the same with other cards may incur an upfront fee.

Watch Your Spending and Avoid Going Too Far

When using a credit card, it is usually advised to only make necessary purchases. If not, you’ll end up wasting money on unnecessary purchases. The entire monthly credit card cost will only increase as a result.

In the worst-case scenario, you might go over your budget right before making a significant credit card purchase. This may complicate subsequent payment cycles and lower your credit scores.

Decrease late payments

You should always settle your balance completely each month. If you can’t, though, put a priority on paying at least the minimum payable amount before the deadline. Even a few days of late payment can result in late fees being charged to your credit card company.

The long-term harm of a missed payment of 30 days or more can affect your credit ratings significantly. Your credit report will reflect a late payment for seven years.

Enroll in autopay, set a reminder on your phone, schedule early payments, or use any other options your credit card provider may have to help you make all of your payments before the due date to prevent late payments.

Spend the money and make money

For cashback deals, several card issuers collaborate with large retail chains. If the card is used to pay for expenses such as utilities, meals out, movie tickets, and other things, many credit card providers will give reward points or cashback. 

By keeping an eye out for offers like this, you might really make money while using your credit card. Reward points can be used to purchase anything from a small gift certificate to a large item like a car by selecting the present from the company’s reward catalog.

Always pay in complete

One will be charged high interest on your credit card, ranging from a hefty 24% to 40% annually if they only make the minimum payment due and roll over the balance that is still owed. There is no grace period for additional purchases, and interest is applied from the day of purchase.

The easiest way to note the credit card usage is to, as much as you can, pay off the entire balance payment at the end payment cycle. Due to the fact that you are debt-free at the end of the billing cycle enables the credit card to work in your favor.

Spreading out modest payments over the course of the month will allow you to pay the full amount before the due date in one lump sum. Alternatively, since doing so will reduce the interest, you can spend more than the bare minimum required.

Pay promptly

Exorbitant late payment costs are associated with credit cards. Make prompt payments to avoid paying this. Payment delays will have a negative impact on your credit score because they are strongly related to your payback history.

Also, if you have several credit cards, the total balance on all of them will significantly increase your debt. These scenarios damage your creditworthiness and make it more challenging for you to obtain loans or any other form of credit in the future.


Your ability to save and invest is decreased by credit card debt, which can negatively impact your financial future. On the other hand, wise credit card use not only provides a number of financial advantages, but also dramatically improves your ability to organize and utilize your resources.

Searching for a credit card that’s truly your vibe? With Fi.Money, you get all the extras like lounge access, a low foreign exchange fee, instant credit card issuance, personalized reminders, spending insights, and more. The welcome offer comes with 5,000 unique vouchers from premium brands!

You can better comprehend, monitor, and manage your credit card if you remember the aforementioned important information. Lastly, a credit card might be an excellent modern financial asset that genuinely makes you happy.

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