What is a Credit Card in Simple Words?

There are many people in India who have heard about credit cards but they don’t know what is credit card in simple words. Here you can see the meaning of a credit card including the benefits and cons of using it. Well, a credit card is a financial instrument that has a pre-approved spending limit issued by the bank. It is issued on the basis of your credit history and income. If you have a good Cibil score and a high income then you can easily apply for a credit card. On the other hand, it is a rectangular plastic piece that has the bank’s name, cardholder’s name, and many other details. You can explore the elements of credit cards in this blog.

Elements of a Credit Card

You can find the following details on a credit card on the back and in front.

Elements on Front Side of the Card

  • Issuing Bank Logo and Name
  • 16 Digits Card Number
  • EMV Chip
  • Hologram
  • Contactless Payment Logo
  • Cardholder’s Name
  • Expiration Date of the Credit Card
  • Card Network Logo Visa, Mastercard, or Rupay

Elements on Back Side of the Card

  • Magnetic Strip
  • CVV Number
  • Cardholder’s Signature Stripe
  • Complaint Numbers

Advantage and Disadvantage of Having a Credit Card

There are multiple advantages and disadvantages of having a credit card in India. You must go through all of them before you choose a card.


If you want to see the benefits of having a credit card in India then you must explore all of them below:-

Fast Debt

If you have a credit card then it is the fastest financial instrument to grab a debt. You can spend money on credit provided you by the bank and you can pay it later when you clear the card dues.

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Build Credit Score

Using a card efficiently and making all the credit card bill payments on time builds your Cibil Score. If you have a high Cibil Score then the gates to Personal Loans, Home Loans, and Other Loans open for you.

EMI Transactions

You can also convert high transactions into EMIs and pay them on a monthly basis if you are making payments from your card.

Deals and Offers

Every credit card has a lot of offers on various categories like travel, shopping, entertainment, and many others. You can earn cashbacks and discounts on these categories if you have a cashback of that specified category.

High Credit Limit

If you are having a high credit score and a high income then you will get a high credit limit on your card. You can make multiple transactions if you have a good spending limit.


You will only face a disadvantage on a card if you become careless while using it. So, there are some cons of a credit card if you are not using it smartly.

Late Bill Payment

Many people only pay the minimum amount due at the time of credit card bill payment. It creates a financial burden on them and they fall into the credit card trap. So, it is one of the disadvantages of using a credit card.

Veiled Costs

Every credit card has a hidden cost in the form of an annual fee, joining fee, and processing fee. You will have to pay the annual fee every year to use the card without any resistance.

High Interest Rate

The rate of interest on the credit card debt is the highest of all the debts. So, if you have an outstanding amount for long then you will have to pay a high-interest amount on the outstanding balance of your card.

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After going through the above explanation, you know what is credit card in simple words. You have also seen the elements present on the front and the backside of a card. Credit cards have many benefits but if you don’t use your card smartly then you will have to face the disadvantages of using a card.

Personal Loan Interest Rates March 2024
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ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
SMFG India Credit12.00% - 24.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
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Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
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