What is a credit card?
A credit card gives you a monthly credit limit that you can spend now and repay later. If you pay the full bill by the due date, you use the bank's money for free. If not, interest kicks in at some of the highest rates in Indian banking.
Last updated: 15 June 2025
The billing cycle
A credit card has a statement cycle (usually 30 days) and a due date (usually 15-20 days after the statement). Purchases made close to the start of a new cycle enjoy up to 50 days interest-free. Purchases made close to statement date get only 15-20 days.
What happens if you don't pay in full
The bank charges finance charges of 3-4% per month (36-48% p.a.) on the unpaid portion, plus a late payment fee. Only paying the 'minimum amount due' clears the late fee but not the interest.
Rewards and benefits
- Reward points, cashback, or air miles on eligible spends
- Airport lounge access on premium cards
- Fuel surcharge waiver at select petrol pumps
- EMI conversion on high-value purchases
- Complimentary insurance covers (lost card, air accident)
Common mistakes to avoid
- Paying only the minimum due month after month
- Cash withdrawal from ATMs (interest starts immediately)
- Maxing out limit close to statement date (hurts credit score)
- Ignoring the annual fee - many can be waived on spend targets