Credit card
Market basicsA revolving credit facility with an interest-free period conditional on paying the full statement.
In plain terms
Free money for forty-odd days, or a 42% loan. One behaviour separates the two.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Credit card interest
Market basicsInterest charged on a revolving credit card balance, typically 3–4% a month.
In plain terms
The most expensive money most Indians ever borrow — 36–48% a year, and paying the minimum takes over eight years to clear.
Billing cycle
Market basicsThe period between two credit card statement dates.
In plain terms
A purchase just after a statement gets the longest interest-free period; one just before gets the shortest.
Grace period
Market basicsThe interest-free window between a credit card statement and its due date.
In plain terms
Conditional on clearing the full statement. Once a balance revolves it disappears — including on new purchases.
Minimum amount due
Market basicsThe smallest payment that keeps a credit card account current.
In plain terms
The most misleading number on an Indian statement. Paying it starts interest on the whole balance and ends the grace period on new spending.
Unsecured loan
Regulation & taxBorrowing with no asset charged to the lender — a personal loan, a credit card outstanding or a consumer durable loan.
In plain terms
There is nothing to seize, so the lawful remedies are slow and expensive relative to the balance. The rate you were charged at the outset already priced that weakness.
Good debt
Risk & psychologyBorrowing at a rate below the return the borrowed money can reasonably earn.
In plain terms
A cheap home loan may qualify. A credit card never does. The test is the rate, not what you bought with it.
High-interest debt
Market basicsBorrowing whose interest rate exceeds any realistic expected investment return.
In plain terms
Repaying a 40% credit card is a guaranteed, tax-free 40% return. Nothing you buy will beat it.