Credit cards provide a convenient alternative to cash for making purchases and paying bills. Moreover, they offer perks like reward points that can be redeemed for exciting discounts. However, applying for a credit card can be puzzling, especially if you do it for the first time.
Nowadays, various credit cards are available in the market, each with unique features and fees. You can also check out providers offering free credit cards to eligible applicants.
In this article, we will talk about facts to consider before applying for your first credit card.
Things to consider before getting a credit card
- Why do you need a credit card?
Before getting a credit card, you should find out your reasons for needing one. Many people take out a credit card as it can boost their credit score, make them eligible for loans, help them make cashless purchases, and give them rewards for usage.
- Choose a card that meets your needs
There are many types of credit cards in the market, but not all of them are designed for your needs or a specific lifestyle. You should do research to find a credit card optimised for your unique lifestyle or financial goals. You can get a credit card without any hidden joining or annual fees. For example – OneCard, ICICI Bank, and HDFC credit cards.
- Harness benefits to your own advantage
When looking for a credit card, it is important to compare the features and benefits of each card. Top credit cards often come with various offers that can be utilised to improve your financial situation. Understanding how to qualify for these offers, such as through milestone spending, clearing monthly bills, focusing on top purchase categories, paying utilities, and using your credit card for everyday needs, can help you make the most of the benefits provided by the card.
- Credit cards for beginners
There are credit cards designed for beginners – students, low-income earners, and people with low credit scores. You can apply for an add-on card through a primary cardholder, who can be your spouse or parent. You can also apply for a secured credit card that requires an upfront deposit. These credit cards are designed for people with low or no credit scores.
- Consider the benefits against the demerits
Having decided on the credit card of your choice, the next thing is to check its benefits compared to other cards. Some benefits include low entry or zero entry fees, zero annual fees, affordable interest rates, grace periods, reward points, and higher credit limits. You must weigh the card’s benefits and create a plan to obtain them. You must also have a plan to avoid late payment fees on your credit card, overspending impulsively, and doing anything that may attract penalty fees and sanctions.
- Check the eligibility criteria
Every credit card comes with its own eligibility criteria. You must meet the requirements before your application can be approved. The specific criteria depend on the type of card you are applying for and the credit card provider’s policies. Generally, the requirements include age (18+ years), proof of income, proof of address, a PAN card, a government-issued ID, and a decent credit score.
- Terms and conditions
Every credit card comes with a set of terms and conditions (T&C) to be followed by the user. You must understand and agree to the T&Cs guiding the acquisition and use of credit cards before applying for one. Flouting these terms may breach the card usage terms and attract stiff penalties.
- Check reviews and testimonials
Every product or service can be assessed through ratings and reviews online. The same is applicable for credit cards. Read the testimonials and check the reviews of other users before finalising a credit card. Reviews can help you get first-hand information from users about the card’s benefits and drawbacks.
Consider these factors before applying for your first credit card to get the best one. Use the credit card responsibly to avoid late fees or penalties and build a good credit score.