Getting your first Credit Card is an important milestone in your life. However, with its multitude of benefits comes great responsibility for managing your Credit Card expenses.
The best way to do that is by understanding the basics, including Credit Card eligibility criteria, fees and charges, credit limits, etc. By securing your first instant Credit Card online, following some good spending practices and understanding the nuances, you can make the most of your Credit Cards.
What are Credit Cards, and how do they work?
Credit Cards are payment cards that offer a credit facility and are designed to support your expenditures. Banks issue them based on various Credit Card eligibility criteria, such as age, occupation, income, etc. Depending on these factors, your credit limit is determined, and you can borrow funds to support your financial needs.
If you have a clear repayment history and utilisation of your credit, banks offer various benefits and discounts that add to their perks. These may include discounts on movie tickets, flight tickets, access to airport lounges, reward points that are redeemable for gifts or cashback, and much more.
Credit Cards work similar to a loan. You borrow money beforehand for your expenses. By the end of the month, a bill is generated for the same amount which you are supposed to pay back.
Benefits of Credit Cards
- Credit Cards are convenient payment methods that eliminate the need to have cash when spending.
- They offer cashback and discounts upon spending through a Credit Card.
- Your repayment histories and use of credit cards help you generate a steady credit score and history, which is beneficial for securing additional credit cards or loans.
- They give you access to emergency funds that can help tackle any type of critical financial situation.
- They are relatively safer to carry and are widely accepted as payment methods.
- You can purchase items that you need on an EMI basis and repay the purchase amount on a periodic basis.
Things to know before you apply for a Credit Card online
● Understand the interest rates
Banks apply interest rates if you do not repay the borrowed money using your Credit Card on time. While it is crucial to clear your dues on time, it is also important to know the interest rate of your chosen card. Additionally, be aware of the payment due date to avoid missing it.
● Type of Credit Cards
There are various types of cards available depending on your needs. Choose the one that suits you best, and avoid selecting one that offers perks that will rarely benefit you. Also, be thorough with their terms and conditions.
● Balance your credit utilisation ratio
Credit utilisation ratio is calculated based on the credit you use divided by the total credit limit. Try to maintain the ratio at 30%.
● Annual fees and charges
These Credit Cards generally have an annual maintenance fee and other penalty charges, which will be levied if the criteria are not met. Thus, understanding these charges beforehand can help avoid paying unnecessary penalties.
Conclusion
Credit Cards offer various perks and offers that add to the convenience of banking. To make the best use of them, it is essential to be aware of Credit Card eligibility and be thorough with its rules and regulations. This quick guide will help you navigate the intricacies of instant Credit Cards online and successfully apply for a Credit Card.
