A credit card is a payment card issued by a bank that lets you borrow money to pay for goods and services within an approved limit and repay it later according to the card’s terms. Credit cards can simplify the payment process, offer financial flexibility and allow you to plan expenses without necessarily having to carry a lot of cash.
However, before making use of a credit card, there are things you need to know about how it operates. Having knowledge of your credit limit, repayment deadline, charges and the terms of the card will give you more confidence in your use of the card.
Key Things Every Credit Card User Should Know
Here are some things you need to know about your credit card.
Knowledge of Credit Limit
A credit limit is the highest amount of money that you can spend through the use of your credit card. Your credit limit is normally determined by the bank based on things like your income, eligibility etc.
As you spend using the card, your credit spending limit reduces and it becomes higher once you repay the outstanding balance.
Understand Your Credit Card Billing Cycle and Payment Due Date
All credit cards have a billing cycle. The purchases made within the billing cycle are recorded in your credit card statement.
Typical items in your statement include:
- Total outstanding balance
- Minimum amount due
- Payment due date
- Transactions made during the billing period
- Applicable fees or charges
The payment due date tells you when the required payment must be made. Reviewing your statement frequently allows you to get an understanding of your expenditures and ensures that you don’t miss any payment due dates.
Know About the Grace Period
This is one of the important things to understand about any credit card. The grace period sometimes called the interest-free period — is the number of days you’re given to repay your outstanding balance in full without being charged any interest.
If you pay off your statement completely within this window, your credit card effectively works as a free, short-term loan. If you pay only part of it — or nothing at all — interest starts accumulating, usually from the date of the original transaction, not from the day the grace period ends. Knowing your exact grace period and your due date is the difference between using a credit card for free and paying for the privilege.
Know the Difference Between Minimum Payment and Total Amount Due
Minimum payment refers to the minimum amount of money that should be paid up by the due date. Making this kind of payment gives you some flexibility when you are unable to pay off the full amount.
If you can afford it, paying the full statement balance by the due date is generally a better way to avoid carrying debt and potentially incurring interest or other applicable charges.
Before using a credit card, carefully read how your bank calculates interest, fees and minimum payments. Never assume that paying the minimum means there will be no additional cost.
Know the Charges Associated with Your Credit Card
It is important to know what kind of charges are associated with your credit card before making use of it. Based on the type of your credit card and its usage, these might consist of the following:
- Interest or revolving credit charges
- Annual or renewal fees
- Late payment fees
- Penal interest
- Charge for cash withdrawal
- Other service fees
Understand Credit Card Cash Withdrawal
Credit cards also offer cash withdrawal facilities, depending on the card and its conditions. Cash withdrawals may have separate fees, interest and repayment conditions from regular purchases.
According to Nepal Rastra Bank, cash withdrawal by credit card is restricted up to 10% of the total credit limit. For instance, if the credit limit is NPR 100,000, the total cash withdrawal limit would be NPR 10,000.
Ensure that you check the cash withdrawal limit, cash withdrawal fee, interest, and repayment terms before making a cash withdrawal.
Credit Card Statements
Your monthly statement is one of the best ways to manage your credit card. Review your statements to check that all your purchases are made and accurate. In addition, it will assist you in identifying your spending patterns.
If you notice an unfamiliar or incorrect transaction, contact the bank as soon as possible.
Keep Your Credit Card Information Safe
Credit cards make both physical and online payments convenient, but basic security practices are important.
Never share your PIN, OTP, CVV or other sensitive card information with another person. Bank employees should not need your OTP or card PIN to provide regular customer support.
Always pay through a secure payment gateway. If your card is lost or stolen, inform the bank immediately so that it can be blocked and no-one can use it.
Explore Global IME Bank Credit Card Options
If you are looking for a convenient credit card in Nepal, Global IME Bank offers credit cards designed to assist your daily expenses and give you more convenience. Banks offer two types of credit cards, Visa International Gold Credit Card and Visa Domestic Classic Credit Card. One can choose the right card as per their needs and eligibility. Cardholders can also manage their cards conveniently through the Global Smart Plus App where they can apply for a credit card, link their card, make payments, view their card statements and block their card directly from the app. Global IME Bank also provides Easy Buy Easy Pay facility for credit card holders for eligible purchases from different merchants where they can buy goods on 0% EMIs.
Ready to choose the right credit card for your needs? Explore Global IME Bank’s credit card options and apply for the card that best suits you.
Use Your Credit Card with Confidence
A credit card can be a convenient financial tool when you understand things well.
The safest approach is simple: spend within your budget, know your due date, understand the charges, review your statement and protect your card information. The goal is not to avoid using a credit card, but to understand it, plan your spending and use it effectively.
