Basic Credit Card
Reviewed by Aug 27, 2020| Updated on
What is a Basic Credit Card?
A basic credit card is a credit card with no special characteristics or benefits and no annual fee. The features of a basic credit card remain, essentially, the same among different financial institutions, while the credit limit for the card always depends on the creditworthiness of the cardholder.
Basic credit cards are expected to be easy to understand for customers. The terms and conditions stay transparent. They do not come with minimum spend criterion or do not offer privileges like the other advanced cards.
Basic credit cards are best suited to customers who don't want to understand complex fine printing and tend not to mess with credit card rewards schemes, or who don't spend enough to receive substantial rewards. Prospective cardholders with a small credit history may consider qualifying for a basic credit card easier.
Things to Know About a Basic Credit Card
Although basic credit cards are generally consistent across financial institutions, that doesn't mean they have the same terms to give. Usually, the interest rate on the card would depend on the credit score on the cardholder. As with other credit cards, the card issuer will not charge any interest if the cardholder pays the balance amount in full on time each month.
The credit company issuer offers cardholders a line of credit (LOC), allowing them to borrow money in the form of cash advances. Issuers typically pre-set borrowing limits on the basis of the credit rating of a person. A vast majority of companies let the customer make purchases with credit cards, which remain one of today's most common methods of payment to buy consumer goods and services.
Individuals with poor credit history pursue secured credit cards, which require cash deposits; such cards provide them with proportionate credit lines.