← GlossaryBanking
Credit Card
A credit card lets you borrow up to a limit for purchases and repay later. If you clear the full bill by the due date, you pay no interest. If you pay only the minimum, the rest attracts interest that often exceeds 36% to 42% a year.
Why It Matters
Used carefully, a credit card builds your credit score. Used carelessly, it is one of the most expensive loans available.
In India
Revolving just ₹50,000 of credit card debt for a year at 42% costs around ₹21,000 in interest.