What are the 5 Things to Know Before Getting your First Credit Card in India?
Originally posted on January 7, 2020 @ 1:02 pm
According to the Reserve Bank of India, the total number of active credit cards in the nation as of August 2018 stands at 40 million. Credit cards became an indispensable tool post demonetisation, providing instant access to credit during cash unavailability. Many users availed their first credit card to make payments and meet the necessary expenses on credit.
Credit cards allow users to make payments on an existing line of credit which they are liable to repay later on. Card providers allow users to repay the utilised credit without interest up till a certain pre-set time period. Doing so can help users avail additional discounts from the provider.
If you are going to apply for your first credit card, here are a few essential pointers you must know.
5 things about credit cards for first-time users
- The difference between debit and credit card users
Credit and debit cards are both plastic cards which provide users access to funds. However, while debit cards help you access the available funds from your bank account, credit cards allow you to access a pre-determined line of credit which you are liable to repay.
- Every credit card comes with a credit limit
Credit limit is the total line of credit available for you. Financial institutions decide the limit sanctioned based on two primary factors – current income and credit history of the applicant.
Typically, your first credit card may come with a comparatively lower limit. You can request for an increase after a period of timely repayments. You may even find the limit increased from your card issuer’s end without your prior request.
- Know about the reward programs
Every credit card comes with attractive and unlimited reward points on transactions across different sectors. While some cards offer reward points on every transaction, others offer specific additional points on shopping, flight and hotel booking, fuel purchase, and more. These points can be redeemed for cashbacks, discounts, gift vouchers, etc.
Before getting your credit card, enquire about its reward programs and how to redeem those. Avail the card that offers features and benefits which best suits your lifestyle requirements.
- Understand the billing cycle and billing date
A common notion among people is that credit cards incur a high rate of interest. Well, that happens only when you fail to pay the bill within its due date.
- Credit cards come with a billing cycle of typically 30 days.
- A bill is generated on a fixed date every month, called the billing date or statement generation date. It contains details of all the transactions made using the card during a billing cycle.
- Users receive a grace period of 20 days before the due date of that month. Interest rates are levied only when you miss this due date to pay off your total outstanding dues.
So, if utilised responsibly, these cards do not incur any interest or penal charges. Learn to read your credit card statement correctly and avoid errors.
- An excellent financial tool to improve your CIBIL score
The CIBIL score determines creditworthiness of an individual based on which lenders gauge the financial responsibility of users. Credit cards affect your CIBIL score and credit profile, both positively and negatively in various ways.
- Timely payments of bills every month can leave huge positive impacts. Whereas, a default affects negatively.
- Maintaining a credit utilisation ratio within 30% to 50% impacts positively on your CIBIL score.
- Pay the minimum amount due on your statement only when you have insufficient funds for the full payment. Always pay the total due amount to avoid interest charges, piling debts, and improve your CIBIL score.
Ensure to avail the first credit card according to your requirements and financial capability.
How to apply for a credit card?
Applicants need to meet certain eligibility criteria to apply for a credit card. Some of those include:
- Age bracket, usually within 25 to 65 years
- A healthy CIBIL score of 750+
- Must have no record of default in credit history
Failure to meet the eligibility parameters is one of the most common reasons how your application can be rejected. Once you fulfil all the criteria, know the process of how to apply for a credit card easily.
Step 1: Visit the lender’s official website and fill up the online application form.
Step 2: Submit every document necessary.
You shall receive your first card after verification and approval from the lender. One of the prominent financial organisations in India, Bajaj Finserv brings the exclusive Bajaj Finserv RBL Bank SuperCard which combines multiple credit card features into one.
Bajaj Finserv also brings their customised pre-approved offers to make the procedure to avail such cards simple and less time-taking. These offers are available on credit cards, personal loans, home loans, business loans and a range of other financial products. You can check your pre-approved offer by providing details such as name, phone number, etc.
So, avail your first credit card today to meet all your financial requirements today and repay the credit responsibly tomorrow.