Credit cards are much more than a spending tool these days. They are a way of boosting your credit history and getting loans at an advantageous interest rate.

When you have a credit card in your pocket, you can also enjoy the benefits like cheaper fuel, insurance cover and even some cellular plans as well. So, it’s a smart resource with loads of benefits only if you use it in the right manner.

If you have just got a credit card, then you need to keep scrolling to learn some basics that will make you a smart credit card owner.

How Does a Credit Card Work?

This is the most common question that pops in the minds of credit card users. In simple terms, a credit card allows you to take short-term loans to a set limit. Every time you swipe a credit card, the credit card provider will pay the money on your behalf, and you will have to pay back the money to the credit card provider with or without interest. If you fail to pay back the company by the due date, the amount you need to pay will keep on increasing so you better note down the deadlines from the first use.

Is My Credit Card Secured or Unsecured?

You can know the answer to this yourself after you understand the difference between the two. A secured credit card is that for which a payment has been made in cash. This payment is equal to the limit offered by the card. Unsecured cards, in contrast, don’t have any backing, so they prove to be a higher risk for the issuers.

What is an Interest-Free Period?

Interest-free period as the name suggests is the period during which you can buy anything with your credit card without having to pay interest for the same. This period lasts from a few days to a month depending on the issuer.

What’s the Annual Fee on Credit Cards?

An annual fee is applicable on almost all secured credit cards and several unsecured credit cards as well. People who pay an annual fee on an unsecured credit card have a higher chance of earning hefty reward points as opposed to the people who don’t pay any annual fee.

Can I Use a Credit Card for Overseas Payments?

Yes, you can, but in most cases, you will need to pay foreign transaction fees which is usually 3 to 4 percent of the purchase value. If you make overseas payments often and you want to avoid this fee, then you should try to get a card with an EMV chip.

How Credit Cards Improve Your Credibility Score?

If you have just acquired your first credit card, then you need to know that if you pay all the bills on time and stay within the permissible limits, you will get a healthy credit record. This record will define your credibility as a borrower and would help a creditor decide your reliability in case you ever need a loan.

How to Avoid Late Payment Fee on a Credit Card?

When you get your first credit card, you should develop the habit of paying all the credit card bills on time. If you fail to meet the deadline for three days or more, the credit card provider will levy a late payment fee. This is not only an added expense, but it can hamper your credibility.