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How does a credit card work?

The amount you can borrow every month is called your credit limit. This is set by the card issuer and will be determined by your income, payment history and credit score.

Once a month, you'll receive a bill that lists all of your credit card transactions. The statement balance is the amount you owe for the month. 'Current balance' is the statement balance plus any new transactions you don't need to pay until the next billing cycle. The Minimum Payment Due (MPD) is the amount you need to pay to avoid any late fees.

Besides the MPD, you have the option to repay in equated monthly installments (EMIs). It's recommended, however, that you pay off your credit card bill in full every month. Any amount not paid will be carried over to your next bill, and you'll have to pay interest on this.

What is interest on credit cards?

Interest is the amount you'll be charged for borrowing money if you don't pay your credit card balance in full every month. The interest will be calculated as a percentage of the amount you owe. This rate is set by your credit card issuer, and different cards may come with different rates.

There are some transactions, such as cash advances, which will incur interest charges from the first day of transaction.

Some card issuers will offer a limited-time 0% introductory interest rate when you first get the card. Once this ends, you'll be charged interest if you don't pay the full balance every month. There may also be an interest-free credit period (excluding cash advances) as long as the credit card is settled fully by the payment due date. 

Always check your credit card terms and conditions to see what types of transactions you'll be charged interest on. 

What are the advantages of a credit card?

There are several advantages to having a credit card as long as you use it responsibly.


Credit cards give you the power to securely purchase items in stores, by phone and online, saving you both time and money. They're also really convenient for bigger ticket items, such as furniture or a holiday, that you can repay over the course of a few months.

Along with groceries and utility bills, credit cards can also be used for rent and education fees, and for seasonal events like festivals. 

Better fraud and purchase protection

If you lose cash, there's not a lot you can do. If your credit card goes missing or it's been stolen, you can notify your card issuer, block the card and request a replacement. 

At HSBC, our credit card insurance covers:

  • Lost card liability
  • Counterfeit and skimming of cards
  • Online fraud protection
Using a credit card is safer than using a debit card, because it's not directly connected to your bank account. With the HSBC Platinum Credit Card, you'll get complimentary fraud protection cover and lost card liability cover of up to INR300,000.

Explore more: HSBC online security and secure usage guidelines

Cashback and other rewards

Credit cards can offer all sorts of incentives and the rewards for each credit card may differ. There's often welcome privileges and fees waived for new customers. 

Popular rewards programmes offer dining discounts and unlimited cashback on all your transactions. Travel cards may also come with an impressive range of perks. You can enjoy priority boarding on flights, premier lounge access at airports, extra baggage allowance, and free room upgrades at partner hotel chains.

You can visit the HSBC Credit Cards Rewards Programme page to check out the various credit cards and rewards on offer.

Improve your credit rating

Your credit history shows banks and other lenders how well you can manage debt – or not – and proves to lenders that you're a responsible borrower. 

A credit card can help you build up a good track record of paying off debt. You'll need a good credit score when it comes to applying for larger loans like a mortgage. Not keeping to the terms of your credit card agreement may harm your score.

You can build your credit score with a credit card by:

  • Keeping a low credit utilisation ratio
  • Always paying at least the minimum balance
  • Paying the bill in time every month

Charging bills that must be paid monthly to your credit card (and then paying it off in full) is a great way to boost credit score.

Additional credit for the unexpected

Because life is full of surprises, a credit cushion can come in handy. You can choose to increase your credit limit from time to time, if you're eligible, for any unexpected expenses while travelling overseas or to pay for large purchases.

What are the disadvantages of a credit card?

Before you apply for a credit card, there are a few key things to think about.

You could rack up debt

Do you find it hard to control your spending? What about setting a budget and sticking to it to save money? If so, then a credit card may not be the right borrowing tool for you.

If you decide it is, then you could set yourself some rules for spending. These can be simple things such as only using your card for emergencies, or borrowing below your limit. Remember: your goal should always be to pay off your statement balance in full, no matter how much you spend every month.  

Look for a card with the lowest possible interest rate if you think you'll be carrying a balance forward. Keep in mind that you don't want to be setting yourself up with long-term debt. 

Extra fees and charges

Some credit cards charge an annual fee and there may be fees for certain types of transactions, such as:

  • Cash withdrawals
  • Balance transfers
  • Going over your credit limit
  • Late payments
  • Overseas currency conversions
  • Withdrawing from ATMs while abroad

These won't just cost you money – they could harm your chances of getting credit in the future, too.

There's no annual fee for the HSBC Visa Platinum Credit Card. For the HSBC Cashback Credit Card, the annual fee of INR999 is reversed if your total annual spend is over INR200,000. This fee is waived for HSBC Premier customers.

Other things to think about

Annual Percentage Rate offered

The Annual Percentage Rate (APR) is how lenders describe the cost of borrowing money over a year, taking into account the purchase interest rate and fees associated with having the credit card, such as an annual fee. 

When comparing credit cards, take a look at the representative APR to see how much a credit card could potentially cost you.

You may not get the representative example

Lenders use representative examples to show the potential costs of a particular credit card. And to be able to advertise this, they need to reasonably expect to offer the representative APR (or lower) to at least 51% of successful applicants. 

It's important to be aware that you may not receive the representative APR when applying for a credit card. The actual APR you're offered will depend on the lender's assessment of your personal circumstances. 

Eligibility requirements

Each bank or lender will have different requirements when you apply for a credit card. It's best to check with them directly.

You can apply for an HSBC credit card if you're employed and:

  • At least 18 years old
  • A resident Indian in one of the following cities: Bengaluru, Chennai, Gurugram, Hyderabad, Mumbai, New Delhi, Noida, Pune, Chandigarh, Kolkata, Jaipur or Ahmedabad
  • Have a minimum annual income of INR400,000 a year before tax

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