• Home
  • Progress With Us Articles

Demystifying Credit Cards: How do Credit Cards work in India

3 min read Jan 2, 2024


Before you start using your Credit Card, knowing how this financial tool works is essential. While Credit Card benefits are many, you must leverage Credit Card features effectively to reap the most advantages.

By understanding Credit Card mechanics, you can enhance your lifestyle standards and literally earn “free money”. Also, Credit Card benefits include exclusive deals on everything from shopping, dining out, and travel to fuel waivers and free airport lounge access.

Credit Cards explained 

Your Credit Card is a financial tool enabling you to access the issuer's credit. Instead of using cash, you can make purchases as per the assigned Credit Card limit and balance. The issuer is usually a financial institution such as a bank.  

Also Read: What is a Credit Card?

How Credit Cards work 

You can use your Credit Card when making payments both online and offline at the point of sale. During the checkout process, opt for the Credit Card payment option and make easy payments within minutes.  

Understanding how Credit Card payments work is also critical. At the end of the payment cycle, you need to pay the amount mentioned in your monthly statement. So, how does Credit Card interest work? Well, if you delay the payment or only make a partial payment, you will be charged interest and penalties. If you make all payments on time, you can enhance your credit score and be eligible for superior credit products. 

How Credit Cards transactions work

Your Credit Card comes with a unique 16-digit card number that helps identify it. This number, your name, the logo of the payment network, the expiry date, and a unique Card Verification Value (CVV), are all printed on the card. The CVV is used to authenticate your card during any transactions. Here’s a snapshot of how Credit Cards work when shopping-on ecommerce websites and physical stores. The same will apply to any kind of online or offline usage of Credit Cards.

Online shopping

  • During the checkout process, choose the Credit Card option.
  • Add all details such as name, identity number, CVV, and expiry date.
  • You will also receive an OTP (one-time password) on your mobile or email ID for further verification. This step helps enhance Credit Card security.
  • Type in the OTP correctly.
  • Once the Credit Card authorisation is complete, the purchase goes through.

Offline shopping

  • When you shop at a physical store, Credit Card processing works slightly differently.
  • The cashier will swipe your Credit Card on the card machine.
  • You will need to input the correct PIN (set by the bank or you) for authentication. Once done, the Credit Card transaction is complete.
  • Alternatively, for a contactless Credit Card, tap your card on the machine, and the transaction is complete.

Types of Credit Cards

There is a wide range of Credit Cards available. Choose one based on your needs:

Rewards Credit Cards

This category lets you earn redeemable reward points on every purchase made using this card. Redeem reward points against a curated range of products or for vouchers on services such as dining out.

Cashback Credit Cards 

This is another popular card that lets you earn instant cashback when you make a purchase. The cash is credited to your Savings Account linked to the card. Use it to shop or leave it in your account to earn interest.

Also Read: 6 things to consider before opening a Savings Account

Travel Credit Cards

Earn air miles when making travel-related purchases such as flights, and subsidise future travel with the rewards. Travel miles can also be redeemed for discounts on other travel-related expenses, such as car rentals, hotels, cruises, and activities.

Retail / co-branded Credit Cards

Your card issuer will have partnered with your favourite retail platforms and brands to deliver more value. Earn cashback, air miles, and other brand-relevant rewards, which translate to higher value for lower spending.

Credit Card interest and fees 

You can expect to pay the following fees on your Credit Card:

  • An annual fee, though some cards do not charge a fee.
  • Late penalty when you make a payment after the due date of your payment cycle.
  • The interest of 3.6% per month and above is charged on outstanding dues when you only pay the minimum amount or make a partial payment.


Understanding Credit Card operations and functionality is a must to help you leverage this tool effectively. Axis Bank offers an attractive range of Credit Cards for all user profiles and lifestyle needs. The application process is simple and seamless. Processes such as video KYC, bring convenience and help expedite the activation process. Also, reap the benefits of perks such as rewards programmes, cashback, air miles, exclusive deals and offers, fuel waivers, and complimentary airport lounge access.


Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision