Note These Key Points Before Apply for Credit Card

Learning how a credit card functions is a wise move, especially if you are trying to apply for credit card for the first time.

Credit cards are an exceptional medium for purchasing products and are more beneficial compared to debit cards. However, there is a common misconception that credit cards can lead to instant debts. That is why the number of such cardholders in India is only 36 million compared to 846 million debit cardholders.

Credit cards can be the best tool if you ensure your expenses remain under control and you clear the bill within the grace period. Doing so keeps you out of debt and you can enjoy the various rewards too.

Before you apply for credit card, do check out these key points mentioned below:

Note These Key Points Before Apply for Credit Card
Note These Key Points Before Apply for Credit Card

Key Points Before Apply for Credit Card!

1) Choose the card that best suits your needs 

Every credit card comes with reward points. You can make the most out of it if you choose your credit card based upon your lifestyle and your purchase behaviour.

For example, you can opt for travel credit cards if you are a frequent flyer. These cards provide additional reward points with flight ticket purchases and hotel bookings. You can use these points to make your future flight ticket purchases affordable. These cards also give you complimentary airport lounge accesses throughout the year.

Similarly, you can opt for fuel credit cards if you drive regularly. These cards offer waiver on fuel surcharge along with additional cashback on fuel purchases. Many lenders also offer double reward points on transactions made at partnered fuel stations using such cards.

2) Compare the interest rates and other fees 

You have to pay interest only when you fail to pay off the credit card bill within its due date. However, do compare the interest rates offered by financial companies before you apply.

Also, take into account the various charges that you will have to incur. For example, joining fee, annual fee, foreign transaction fee, cheque payment fee, late payment fees, balance transfer fees, etc. are some which you must look out for.

3) Ensure you use the card responsibly

Before you apply for a credit card, ensure that you will be responsible towards its utilisation as it directly impacts your credit performance.

Follow these points to do the same:

  1. Always pay the bill within the due date.
  2. Your credit card bill comes with a minimum and a total due amount – you can pay the minimum amount due if you don’t have funds to pay off the total due amount. However, doing so will lower your credit score.
  3. Keep your credit utilisation within 30-50% of the assigned limit. Spending more than the prescribed limit will lower your credit score.

4) Check the rewards and offers 

The number of redeemable points you earn may differ from card to card.

For example, some offer 1 reward point for every Rs. 100 spent offline while 2 reward points for every Rs. 100 spent online. Other cards may provide free movie tickets and offers on dining at regular intervals.

You can even get free reward points without spending anything when you apply for credit card. For instance, the Bajaj Finserv RBL Bank SuperCard gives you up to 20,000 reward points as welcome bonus.

5) Ensure you fulfil all the eligibility criteria 

The basic credit card eligibility criterion to fulfil is age; the majority of companies need an applicant to be at least 18 years to apply. Some companies may require salaried or self-employed individuals to have specific incomes too.

6) Check for additional benefits like interest-free cash withdrawal and loans

Usually, credit cards charge high interest rates when you withdraw cash from ATMs. However, some cards provide features like interest-free ATM cash withdrawal up to a specific time period.

You can also get an interest-free emergency loan for a specific period with some cards.

Keep these above points in mind before you apply for a credit card. Spend and repay responsibly with your credit card. You can accumulate reward points with your card and make future purchases affordable by redeeming the points for discount coupons, vouchers, cashback, etc.

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Written by GAURAV KHANNA

Gaurav khanna is an experienced financial advisor, digital marketer and writer who is well known for his ability to predict market trends. You can find Gaurav on Linkedin

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