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What is a credit card, how it works, and how to manage expenses

Used wisely, a credit card can be a great way to enjoy financial freedom and manage your expenses.

With a credit card, you can make purchases now and repay the amount later. Cards are widely accepted, and you can use them almost anywhere you want. 

Credit card meaning

A credit card is a credit facility provided by a bank or credit card provider. It comes with a pre-approved credit limit based on your financial credibility. This allows you to buy things, do online transactions, and pay back the amount with interest each month within your billing cycle.

It's important to understand credit card terms, such as your credit card number, expiry date, Card Verification Value (CVV) code and password. Learning about the common benefits will help you make the most of your card, too. 

Read more: How does a credit card work?

Benefits of credit cards

A credit card comes with a wide range of features and benefits that vary based on the type of credit card you use. 

Separate from your bank account

One of the best thing about using a credit card is that it's not directly linked to your bank account. So when you use the card to pay for any online transaction or purchases at the store, the amount will not be deducted from your bank account. Instead, when you use the card to make payments, the amount is deducted from your credit limit.

Hassle-free shopping

A credit card makes shopping easy and convenient. You can make big purchases without straining your monthly budget. You can buy almost anything you want on low-cost Equated Monthly Instalments (EMIs) and pay for it in smaller instalments over a period of time. 

No need to carry cash

Credit cards virtually eliminate the need to carry cash. Just carry your card in your wallet and avoid the risk of losing money or having it stolen.

Enjoy rewards and cashback

Many credit cards offer benefits like cashback, discounts, reward points and other rewards.

Easy cash withdrawal

Another benefit of using a credit card is that it allows you to withdraw cash whenever you need it. However, you must know using your credit card to withdraw cash may require you to pay a small fee.

Helps improve credit score

This is perhaps one of the most important benefits of a credit card. Making purchases with a credit card and then repaying the amount on time can improve your credit score.

Paying your credit card bill on time shows you're a responsible borrower, which improves your creditworthiness.

Types of credit cards

At HSBC, we offer different types of credit cards. See which credit card would suit your lifestyle and needs.

HSBC Live+ Credit Card

The HSBC Live+ Credit Card is enabled with VISA Paywave technology for contactless payments. It's accepted worldwide and allows you to get unlimited cashback on all transactions. 

Other features include:

  • 10% accelerated cashback on dining, food delivery, and groceries (maximum limit of INR1,000 per billing cycle)
  • 1.5% unlimited cashback on other spends
  • 4 complimentary domestic lounge visits in a year
  • Annual membership fees of INR999, which will be reversed if your annual spending is more than INR200,000

HSBC Visa Platinum Credit Card

The HSBC Visa Platinum Card comes with many offers and rewards, as well as features like:

  • No joining fees
  • Two reward points for every INR150 spent
  • Fuel surcharges wavier
  • Discounts on movies, flights, restaurants, and more

HSBC Premier Credit Card

Enjoy the best offers and a range of exclusive benefits and rewards with the HSBC Premier Credit Card, such as:  

  • A metal credit card
  • Foreign exchange markup of 0.99%
  • Unlimited airport lounge access in India and internationally
  • 3 rewards points, which won't expire, for every INR100 you spend

Apply for an HSBC credit card

Apply online and manage your finances more efficiently with an HSBC credit card.

Apply for a credit card online and complete your application & Video KYC (VKYC) to get an Amazon e-gift voucher worth INR250. T&Cs apply.

Credit card charges

Credit cards typically come with associated charges. Understanding what the most common fees are and you can avoid them, saving thousands of rupees.

For example, some cards charge an annual fee. You'll also be charged interest if you don't pay off your balance in full, or for withdrawing a cash advance on your credit card. Other fees can include late payment fees, credit card international transaction charges, and foreign transaction fees. 

By choosing a low-interest card and paying your card off in time, you can enjoy the convenience of a credit card without the credit card charges. 

5 ways to use a credit card smartly

While credit cards offer a range of benefits, you must use them carefully to avoid falling into a debt trap.

  1. Use a credit card only at trusted merchants, and never share your credit card information with anyone.
  2. Don't overuse the card for random purchases. Use it only for your regular and important purchases and don't buy things that you can't afford to pay back.
  3. Keep track of all your credit card spending.
  4. Take advantage of credit card rewards, cashback, and other benefits.
  5. Plan your repayment and pay off the credit card bills on or before the due date.

Unsure about which card is right for you? 

Explore: Pros and cons of having multiple credit cards

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You might also be interested in 

Learn about the factors that affect credit card interest rates and how rates are calculated.
Understanding credit card fees will help you plan your finances better and avoid unnecessary costs.
Explore 5 factors that can affect your eligibility to apply for a credit card.

Disclaimer

This publication has been issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC), India, Incorporated in Hong Kong SAR with limited liability, for the information of its customers only. This publication does not constitute investment advice or an offer to sell, or a solicitation of an offer to purchase or subscribe to any product / investment. The information herein is derived from sources believed to be reliable and the concerned Information Provider(s) have duly authorized HSBC to use such information provided by them. Whilst every care has been taken in compiling the information, HSBC and the concerned Information Provider(s) do not guarantee, or make any representation or warranty and accept no responsibility or liability as to its accuracy or completeness and shall not be liable for damages arising out of any person's reliance upon this information or any action taken or not taken as a result of any material contained in the publication. Expressions of opinion are those of HSBC and the Information Provider(s) only and are subject to change without notice. HSBC has not independently verified any information provided by the Information Provider(s) or that has been derived from the sources believed to be reliable by HSBC. Opinions expressed herein do not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this publication. This document is for circulation in India only. No part of this publication may be reproduced or stored in a retrieval system without the prior written permission of HSBC. Any liability is accordingly expressly disclaimed by HSBC, its officers, directors and employees.