Credit card
Topic: Payment Systems and Digital Finance · NCERT: Class 7, Ch 11 "From Barter to Money"
Meaning
A credit card is a card issued by a bank that lets you buy now and pay later, up to a fixed limit. The money you spend is a loan from the bank, not your own deposit. If you repay within the billing grace period, you pay no interest. After that, the bank charges high interest. This is why a credit card is not money itself. It only gives you access to credit.
Card networks include Visa, Mastercard and India's own RuPay (NPCI, 2012). Since 2022, RuPay credit cards can be linked to UPI to pay merchants.
Example
Anita has a credit card with a ₹50,000 limit and buys a ₹20,000 phone with it. If she pays the ₹20,000 by the due date, she pays no interest. If she delays, high interest is added to what she owes.
Don't confuse with
- Debit card: a debit card spends your own bank deposit, and the amount is deducted instantly. A credit card spends a loan that you repay later.
Related concepts
- Automated Teller Machine
- Personal Identification Number
- National Financial Switch
- Debit card
- Plastic money
- Point of Sale
- Card tokenisation