Credit cards are amongst the most widely used money tools these days. Even the debit card usage is not so much as is the credit card’s. but the picture is not all pink as it may seem with credit cards. There are a lot of things a user needs to take care of while using credit cards. Here we are with a list of 10 most important things you need to keep in mind with Credit Cards;
The first and foremost question which stands compulsory in the list of must-knows is your income. All credit companies would want to know your income before lending you a credit card as it indicates your repayment capacity.
Higher the salary, higher the chances of getting a credit card.
Another importance that income holds while dealing with credit cards is that it helps your bank on deciding onto your credit limit.
- Relationship with the bank at present
The next in line is what exactly is your present relationship with the bank? If you are an account holder already or have multiple fixed deposits in the bank or have a considerable amount in your savings plus you have always handled you accounts professionally, then there are very high chances that you will be lent a credit card easily. It is always advisable to go for a credit card from the same bank where you have had and still have a savings account.
- Credit history
When you apply for a credit card, your past credit history or credit score is also checked. CIBIL or the Credit Information Bureau Limited keeps a record of every person who is associated with banks. Also, the records regarding any loans (education loan, personal loan, home loan, etc) that you have taken are reflected. It states if the payments regarding the loans are made on time or not.
When you think of applying for a credit card, be sure of the purpose. You must know why do you want a credit card as it will help you in deciding which credit card you want. There are a variety of credit cards available in the market like shopping card, travel cards, general cards, offers cards, etc. once the purpose is clear, it will be easy for you to decide which one to go for.
- Annual fee
There are a lot of credit cards which come with an annual fee. While some of them charge a very small amount like Rs. 500, there are a lot of cards which come with a huge number as an annual charge which may range up to Rs. 10,000. Of course, there are cards which do not have any charge as an annual charge, be sure of the details before you make a choice.
The cards which come with a decent annual fee generally offer great benefits and reward points.
- Credit card against FD
You can avail a credit card against a fixed deposit in your bank. These are called instant credit cards which you get if you open a fixed deposit in a bank.
This option is best for people who have a low credit score and are facing rejections by banks. Taking a credit card against an FD will also help you fix your bad credit score.
- Interest rate
All and absolutely all credit cards come with an interest rate. You have to understand this that if you do not pay your credit bill on time, you will be charged with interest. Ideally, you must choose a credit card with the lowest interest and maximum benefit.
- EMI facility
EMI is a facility that credit cards offer. If you go for a costly purchase then instead of spending all your savings, you can opt for EMIs on your credit card and make monthly payments. It will also keep you away from taking any loans.
- Hidden charges
This you need to take extra care of, credit cards come with hidden charges under the names one-time fee or maintenance fees or processing fee or joining fee, etc.
- Credit limit
The credit limit is the capacity to purchase your credit card offers you. The higher the limit the more you can purchase. If you want to keep your expenses under a check, it would be better to keep your credit limit low.
Once you get hold of your credit card, be very vigilant with its use. Since after purchase the balance is not deducted from the savings instantly, it gives a false idea about the money still at hand and makes one spend more. Read about the best credit cards available in India.