Key highlights
- Credit cards are structured revenue machines: interest, fees, and merchant charges—and they win when you revolve debt. RBI’s card conduct directions set key obligations. Reserve Bank of India
- The biggest trap is Minimum Amount Due (MAD): it keeps you “current” while interest keeps running. RBI explicitly requires clear disclosures like MITC. Reserve Bank of India+1
- Your advantage: treat a card like a payment instrument, not a loan.
Where the money comes from
- Interest (when you don’t pay the full bill)
Revolving credit is the core profit engine. - Fees
Annual fees, late fees, over-limit charges (where applicable), cash withdrawal fees, EMI processing, etc. RBI’s framework covers conduct/disclosures and customer protection expectations. Reserve Bank of India - Merchant fees (MDR / network economics)
You don’t see it directly, but it funds rewards and the ecosystem.
The traps (and how normal people fall into them)
Trap #1: Minimum Amount Due
Paying only MAD can keep the account “active” while interest accumulates. RBI requires transparent “Most Important Terms and Conditions (MITC)” style disclosures so customers understand costs. Reserve Bank of India+1
Trap #2: “No-cost EMI” mental math
Sometimes it’s genuinely subsidised; sometimes it’s hidden via fees/foregone discounts. Always compare with a straight discount.
Trap #3: Cash withdrawals
Often attract immediate charges/interest with no “free period.”
Small questions people search
“Is it bad to use 80–90% limit if I pay on time?”
It can still look risky. Utilisation patterns matter.
“Should I keep multiple cards?”
Only if you can manage them like a spreadsheet: low utilisation, full payments, no missed due dates.
