Important Terms you must know about CREDIT Card [Updated 2023]


i. An add-on credit card is a secondary credit card to the principle or primary credit card that is granted to someone who has a predetermined relationship with the primary cardholder and is subject to the terms and restrictions set forth by the card-issuing company.

ii. The annual percentage rate, or APR, is the cost of credit to the cardholder per year and includes interest and all other fees related to the credit card in a variety of situations dependent on the features of the card.

iii. The billing cycle- often known as the billing period, is the typical interval between the due dates of two bills raised consecutively by the card issuer.

iv. Business credit cards are only given to persons or business entities for use on business-related expenses and not for personal use.

v. Card holders: A person to whom a card is issued or a person who is permitted to use a card that has been issued.

vi. Card-issuers include Indian NBFCs that have been given permission by the RBI to issue credit cards as well as Indian banks that issue debit or credit cards.

vii. Card Loyalty/Reward Programs are those programes connected to a credit card or debit card where the card-issuer or connected merchant establishments, upon use of the card/s, offer digital coupons, points, discounts, cash backs, or other benefits having monetary value that can be used/redeemed for the same transactions or other future transactions after accumulation.

viii. Charge cards are a form of credit card where the user must pay the whole amount due on the due date following the billing cycle and no credit may be carried over to the following billing cycle.

ix. Co-branding Card is a credit or debit card that bears the names of both the collaborating organizations and is jointly issued by a card issuer and a co-branding business.

x. Practicality Credit/debit card use is one of the alternative means of payment that is not typically accepted in comparison to other forms of payment. A fee is a fixed or prorated charge on such use.

xi. Corporate credit cards are those that are given to specific employees of corporate employers. Depending on the attributes of the card, either the corporate entity or the employee, or both, may be held jointly liable.

xii. In accordance with the terms and circumstances specified, a credit card is a physical or digital payment instrument that doubles as a form of identity and has a pre-approved revolving credit limit. It can be used to make purchases and receive cash advances.

xiii. The credit limit is the highest amount of revolving credit that has been decided upon and communicated to the cardholder for use in making purchases on the credit card account.

xiv. A debit card is a type of physical or digital payment device that connects to a checking or savings account and includes an identifying feature.

xv. The physical or digital tool that can be used in place of a card to conduct a financial transaction is known as the "form factor" (xv).

xvi. The Interest-Free Credit Period, which runs from the date of the transaction to the due date of the payment, allows for interest-free payments as long as the cardholder pays the total balance on or before the due date.

xvii. Requisite Amount Due is the minimal sum of money that a cardholder must pay as a percentage of the entire bill amount in order to avoid being considered in default on the payment.

xviii. The standard set of guidelines for the issuing and use of credit cards, known as the Most Important Terms and Conditions (MITC), outline the obligations and liabilities.

xix. Prepaid cards fall under the definition of prepaid payment instruments in the Master Direction on Prepaid Payment Instruments. 

xx. The consumer who has been given a credit card by a card-issuer and on whose name the card account has been formed is referred to as the principal cardholder.

xxi. Unsolicited credit cards are those that are issued without a clear written or digital request or application for them.

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