Understanding Mortgage in Nigeria: A Snapshot
2020-03-19
Globally, credit card provides consumers convenient access to funds for purchases, and it is a way to build an excellent credit rating. This concept is being introduced gradually in the Nigerian financial sector; there are several reasons for the slow adoption of credit cards by both consumers and financial providers (This will require a separate article) primarily due to the risk factors. In this article, we will be looking at the basics of credit cards and how to use them responsibly in Nigeria.
What is a Credit Card?
Credit cards are payment cards given to consumers so that they can pay for goods and services from an agreed line of credit by the issuer of the card, typically a financial institution in Nigeria.
Although a credit card is also a payment card like a debit card, there are differences between a credit card and a debit card. While the debit card gives you access to funds available in your savings or current account with the financial provider, the credit card provides access to the financial provider's funds, which will be paid back in full with interest based on the agreed terms and conditions.
How does it Work?
Credit Cards allow the user to spend money they don't have, i.e. on credit. The amount you have access to is based on the approved credit limit authorized by the financial provider. This amount is based on their internal qualification process while considering several factors such as but not limited to your income, bank history, current household debt, and overall ability to pay back the funds. Financial providers determine the interest rate to be charged on the credit card, and this varies by institution and type of transaction.
When you make a purchase with your credit card at the end of every month, your financial provider sends you your bill, and if you pay the full bill within the interest-free grace period, you won't have to pay interest on the amount you borrowed. However, if you don't pay your outstanding balance in full, then the credit card provider will charge you the agreed interest rate.
Credit card Payment networks in Nigeria such as Visa and MasterCard: process credit card transactions, and ensure that the money for the purchase gets to the merchant and the correct cardholder gets billed.
Why Should You Get a Credit Card?
The major benefit of credit cards is convenience. Getting ready access to funds when needed without needing to carry cash about is something to look forward to, and something credit cardholders enjoy.
For conscientious cardholders, the credit card helps them keep track of their expenses, and so they know which excesses to curb and which to minimize. This helps their financial stability.
Credit cards are internationally accepted, and this means that cardholders worry less about currency conversions for purchases in foreign countries. This also improves their traveling convenience. However, this benefit should be used with caution as it might come with foreign transaction fees.
if you lose your wallet full of cash or your debit card is stolen, you lose your hard-earned money. However, when your credit card is lost, stolen, or used fraudulently, all you have to do is call the credit card provider, most providers usually have a zero clause liability. This means you will not be held responsible for unauthorized purchases and in the case of lost or stolen cards, you get a free replacement card.
Credit Card Eligibility in Nigeria
Currently, most financial providers in Nigeria qualify consumers for a credit card by invitation based on their internal standards, so you need to check in with your chosen institution and make inquiries about the process of obtaining a credit card.
However, banks prefer that the prospective customer have a banking relationship with them, while non-account holders are required to open a domiciliary account.
Financial Institutions Issuing Credit Cards in Nigeria
Below is a list of some of the banks issuing credit cards to qualified customers in Nigeria:
Cost of Carrying a Credit Card
Credit Cards in Nigeria are denominated in Naira or US Dollars and have various costs and transaction limits such as:
Cost:
Transaction Limits:
These costs and limits vary per institution, so you need to consider this in choosing your provider. One way to select a credit card provider wisely in Nigeria is to utilize a platform such as ours - financialratesng.com.
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