What Is a Credit Card? Benefits of Using a Credit Card

A credit card is a financial product provided by banks to customers who wish to use it. With this card, the owner can make purchases of goods and services in advance and then pay later. If you’re curious about what a credit card is and its advantages, please refer to the article below for more information.

What Is a Credit Card?

Let’s clarify what a credit card is and address any questions you may have. A credit card is a type of card that allows the cardholder to conduct transactions within a predefined credit limit agreed upon with the card issuer. A credit card enables users to make purchases in advance and pay later through the bank.

There are many online sellers where users can explore products and use credit cards for upfront payments. Financial experts advise users to spend only within the credit limit provided by the bank and avoid spending beyond their means.

There are two common types of credit cards:

Domestic Credit Card: This type of card can only be used for payments within the country where it is issued. For example, if you have a domestic credit card in Vietnam, you can use it for shopping, payments, and installments within the country’s 64 provinces and cities. It cannot be used for shopping in other countries where it is not registered.

International Credit Card: An international credit card allows the cardholder to make direct payments both within and outside their home country without the need for currency exchange. These cards offer more versatility and are suitable for individuals who travel frequently or live in various countries.

Functions of a Credit Card

The decision to apply for and use a credit card is not arbitrary, as this financial product has proven to be highly convenient for cardholders. Here are some of the functions and benefits of using a credit card:

Deferred Payment:

Credit cardholders can make purchases and pay for them later within a specified timeframe. For example, you can use a credit card to pay utility bills, shop online, book hotel rooms, or purchase airline tickets.

Typically, cardholders have about 45 days to settle their outstanding balances without incurring any interest. After this period, the bank will charge interest on the remaining balance.

Cash Withdrawal:

Credit cards can be used to withdraw cash for various purposes, such as shopping and payments. The cash withdrawal limits may vary depending on the bank. For instance, with VPBank, cardholders can withdraw up to 100% of their credit limit at ATMs nationwide.

Installment Payments:

Many stores and online platforms accept credit card payments for installment purchases of various items. Users can also enjoy 0% interest rates and numerous benefits, making it a cost-effective way to save money.

Why Credit Cards Are Popular

The use of credit cards is becoming increasingly widespread, and users appreciate the convenience they offer. Here are some reasons why credit cards are favored by many:

Expense Management:

Credit card statements provide detailed transaction records from the bank, helping cardholders track their spending regularly. Mobile banking apps offered by banks make account management even more convenient.

Building Personal Credit Ratings:

Banks assess an individual’s creditworthiness based on their credit card usage, among other factors. Having a good credit history is crucial for obtaining loans and favorable interest rates.

Convenient Payments:

Credit cards make shopping for various goods and services at shopping centers, stores, restaurants, and more hassle-free. This allows users to make purchases at any time without the need for physical cash.

Rewards and Benefits:

Credit card users can enjoy a wide range of advantages, including discounts, rewards points, cashback offers, and surprises. For instance, many banks have partnerships with over 700 merchants to offer discounts to cardholders.

Now that the question “What is a credit card?” has been answered in detail in this article, you can better understand whether or not to consider applying for one. Shopdepre is a platform that provides sports equipment, ice cream makers, dishwashers, and more, and all of these products can be purchased using credit cards. If you have shopping needs, feel free to contact us.

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