How Did Credit Cards for Startup Businesses in Nepal Be the Best or Worst? Find out.

Introduction

Credit cards are a type of card that helps in borrowing money from the bank or financial institutions to buy goods or services and pay later. They are powerful financial tools that offer convenience and flexibility in managing personal expenses in everyday life. Credit cards should be used properly to meet our financial challenges.

 A Credit card is a digital payment card which was issued by financial institutions that allows cardholders to purchase anything they want, pay bills, and also withdraw cash on credit.

Debit Card Vs Credit Card

A credit card is different than a debit card in various aspects.  A debit Card can be used to withdraw savings from your bank account whereas a credit card is a credit tool for purchasing goods or services. Banks issue debit cards after opening bank accounts whereas credit cards are issued after verifying the income sources of the person. There is no limit to withdrawing cash from a debit card whereas the limit of credit payment is set by the bank on the credit card.

 After opening your bank account, bank will provide you debit card, there should be a balance in your bank account for withdrawing cash through the debit card.  If there is no amount in your bank account, then you can use a credit card limit.

Eligibility criteria for obtaining Credit Cards:

Bank issues credit cards without collateral after verifying your occupation, salary, or income statement and information of credit. The bank sets credit limits on credit cards according to the client’s income which they are capable of repaying. Every individual should maintain financial discipline after obtaining a credit card. The eligibility criteria for obtaining a credit card are mentioned below:

1. Should be 18 years of age.
2. Salary or other income is to be submitted to the concerned bank.

Documents for obtaining Credit Cards:

Although Nepal Rastra Bank (NRB) has issued guidelines for issuing guidelines for issuing credit cards to individuals, every bank has different documents for issuing credit cards in Nepal. Some of the common documents are discussed below:

1. Application to be submitted to the banks.
2. Salary certificate in case of income from employment.
3. Financial Statements in case of self-employed person.
4. Copy of citizenship or Passport.
5. Recent Passport size photograph.
6. Certificate issued from the embassy in case of Indian nationality.
7.  Work permit in case of other nationals.
8. Duly signed Debit Authority.
9. Corporate Guarantee if required.

Pros of using Credit Cards by the Startup Business Owners

Startup business owners in Nepal may find these cards very helpful in their day-to-day business and personal life which are highlighted below:

1. Emergency financial Support at the time of need to the individuals.
2. Global acceptance for offline and online purchase of goods and services.
3. Convenience in managing personal expenses and safe to carry out transactions.
4. Rewards and cashback are offered by businesses in collaboration with the banks.
5. Building credit score which increases credibility from the viewpoint of the bank.
6. EMI facilities are offered based on the credit cards.

Cons of Using Credit Cards by the Startup Business Owners

We all know that everything has its negative sides. But, if used properly, it can be a gem for managing the cashflows of an individual. So, startup business owners should consider the following while using these cards:

1. High interest rates are charged in case of failure to repay on time.
2. Bank charges are high for obtaining credit cards.
3. Unnecessary spending habits increase affecting our saving habits.
4. Theft of Credit cards by other people.
5. Unusual withdrawal of cash for personal expenses within the card limit.

Frequently Asked Questions about Credit Cards:

     1. Which bank issues first credit card in Nepalese market?

        Nabil Bank issues credit card for the first time in 1990. Himalayan Bank issues the first credit card for domestic                market in 1995.

    2. What are the limit set by the banks for credit card in Nepal?

        The limit set by the banks for credit card in Nepal are:

           Nepal Bank

         Daily Transaction limit for Visa Domestic Credit Card: Npr 50,000 in Nepal.

         Daily Transaction limit in POS: Npr 200,000 in Nepal

           Everest Bank

        Daily Transaction limit for Visa Domestic Credit Card: Npr 20,000 in Nepal.

        Daily Transaction limit: Npr 20,000 in Nepal