Bank Theory

Credit Cards and Loans - Bank Theory Credit Cards, Home Loans, Personal Loans, and Consumer Loans Credit Cards A credit card is a financial product that allows the cardholder to borrow funds up to a pre-approved limit to make purchases or withdraw cash. Interest is charged on the outstanding balance if it is not paid within the due date. Example: If a customer has a credit card with a ₹50,000 limit and makes a purchase worth ₹10,000, they will have ₹40,000 of credit remaining. Mathematical Illustration: Outstanding Balance = ₹10,000 Annual Interest Rate = 36% Monthly Interest = 36% / 12 = 3% Interest for 1 month = ₹10,000 × 3% = ₹300 Home Loans Home loans are long-term loans provided by banks or financial institutions to purchase, build, or renovate a home. They are usually secured by the property itself. Exampl...