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All what you need to know about Cards
In order to stand on common ground with the banking advisor that you –as a customer- are dealing with, there are a few definitions that you need to be familiar with, and they are as follows…
- Credit Card:
A credit card gives its beholder the chance to somehow “borrow” money from the bank to buy/pay for things, then repay the money later on. Each has a credit limit which is set by the issuing bank of the card, and it gets calculated based on the card beholder’s credit score and eligibility criteria.
-When should you repay the borrowed amount, you ask?
The borrowed amount should be repaid within the 52 days before the due date (the credit card’s grace period); it can be paid in full or 5% of the due amount (at the very least).
-What happens when you repay the amount after the due date/deadline?
There shall be late payment fees.
- Debit Card:
A debit card is a card that enables you to deposit your money and pay for your purchases using the card instead of cash. In terms of usage, it’s quite similar to a credit card as they’re both used as payment cards. But unlike a credit card, when you perform any transaction using your debit card, the amount gets deducted directly from your bank account.
Having said the previous, you might have a few questions, such as:
-What are the core similarities and differences between credit cards and debit cards?
Credit cards and debit cards look the same, with a 16-digit card number, expiration date, and personal identification number (PIN codes).
Yet, as previously mentioned, when paying via your debit card, you pay using your own money from your bank account. On the other hand, when paying via your credit card, you pay using the bank’s money and you’re ought to pay it within the credit card’s grace period in order to avoid any late payment fees.
-Why are credit cards and debit cards important?
In a nutshell, holding those cards has numerous benefits as they’re:
More convenient: instead of carrying cash around, you can use them to fulfill payments and your online shopping purchases both locally and internationally.
Always Available: you can use your cards for payments and withdrawals anytime, not needing to abide by any entity’s working hours/days, and you can withdraw up to 100% of your credit card limit (using credit cards) or bank account (using your debit card).
Please check the withdrawal fees available on the charges schedule.
Secure: you need your Personal Identification Number (PIN code) to carry out any transaction, in addition to the fact that a detailed SMS is sent on your registered mobile number once any transaction is made (including the amount, time, date, and merchant name if available). Hence, you won’t have to worry about your debit or credit card being used without your knowledge or consent.
Is that all?
No, there are still some terminologies that each cardholder needs to be aware of…
-Cards Terminologies:
Annual Fee: a fee that is charged each year for providing you with the bank account service (the fee isn’t fixed and it differs from one card type to another) and it’s billed directly from your card limit (for credit cards) or your bank account (for debit cards).
Annual Interest Rate (Credit Cards Only): an amount of money that is applied to the outstanding balances that weren’t paid during the credit card’s grace period (throughout the year).
Card Limit (Credit Cards Only): the maximum amount of money you can borrow from the bank via your credit card (the bank sets the card limit according to the card beholder’s credit score and eligibility criteria as previously mentioned).
Outstanding Balance (Credit Cards Only): the amount of money you borrowed from the bank and haven’t paid back yet.
Due Date (Credit Cards Only): the date on which the cardholder needs to pay the outstanding balance on his/her credit card to avoid late payment fees or interest rates.
Minimum Payment (Credit Cards Only): the minimum amount of the credit card’s outstanding balance that should be paid before the grace period ends.
Grace Period (Credit Cards Only): the time that precedes the payment due date, and that grace period is set by the credit card’s issuing bank.
Late Payment Fee (Credit Cards Only): a fee that the bank charges when the minimum payment is not received by the due date.
Foreign Exchange Fee (FX): a fee charged when any of the cards are used in a transaction with a foreign currency (calculated based on the spent amount).
Dispute Form: a form that cardholders fill to demand their money back in case of any unauthorized charges, excessive charges, or billing errors.