Many people use credit cards, which can benefit personal use. But what if a family, small business, or small group could share a credit card? That would be great! This is why many leading banks now offer floater credit cards.
With these, multiple users can utilize a single credit card linked to one account. So, how do these floater credit cards work, and are they a good option? Let’s explore the details.
What is a Floater Credit Card?
A floater credit card is linked to a single account with a specific credit limit. Different credit cards are issued to each user on this account, allowing multiple people to use one floater credit card simultaneously. Let’s look at a small example to understand how it works.
For instance, suppose a floater card has a credit limit of Rs. 1 lakh. If one person has utilized Rs. 50,000 of this amount, the other users will have access to the remaining Rs. 50,000.
Even though each user has a credit card, all cards are linked to the same account, making tracking and managing financial transactions easier.
What About Billing?
A bill will be generated regardless of the number of users on the floater credit card account. However, each user can check their credit usage through their account.
Uses of a Floater Credit Card
A floater credit card is helpful for families in managing their financial needs. It helps track household expenses, such as rent, groceries, shopping, and travel expenses.
This system eliminates the need for separate bank accounts and credit cards. With only one bill to pay, it simplifies the repayment process.
Additionally, if there are multiple credit cards, each often incurs annual fees, but floater credit cards reduce this unnecessary financial burden.
All accumulated reward points go into a single account, allowing users to redeem cashback, air miles, and discounts as needed. This is especially beneficial for businesses, as they do not need to provide separate cards to their employees.
Precautions to Take
Floater credit cards should be used with caution. Regardless of the number of users, everyone must be disciplined in their spending.
Users should avoid exceeding the credit limit and ensure that bills are paid on time to avoid additional charges, interest, and penalties.
Note: The information provided in this article is for educational purposes only. It is advisable to consult a financial advisor before making significant financial decisions.