As soon as you start working, you will notice people around you talking about credit cards or a marketing guy will visit your office and pitch you the same.
When I started working, most of the people were of my father’s age and they didn’t believe in using credit cards. They were not used to online transactions and if they were, they used debit cards only. Even I got my debit card and started doing transactions through it after I got my job. I was introduced to online transactions by my colleagues during training for my job.
When I got used to it there were a lot of deals and discounts so I was content with my debit card. Then I got transferred and was surrounded by colleagues of my generation. To my surprise, all of them had 4-5 credit cards. I spent the first four and half years of my career around people of my father’s age. And they never thought of using a credit card. From there, getting transferred around the people of my age and they created their monthly cycle around their credit cards.
I got my first credit card last year after considering some factors. And after using it for some months now, I have realised that one should keep certain things in mind while applying for a credit card.
Purpose
I came to know about credit cards when I was in 11th grade but I got one in the eighth year of my career. And my primary purpose behind getting one was to get my credit score and maintain it. A good credit score helps you in getting a car loan and housing loan easily. So thinking about the future I applied for my first credit card.
Most people keep a credit card to use it at the time of emergency. In other words, the card’s credit limit is their emergency fund.
The secondary purpose of having a credit card is rewards. My colleagues utilise different cards for different types of expenses. They have one for petrol and diesel, one for online shopping, one for offline shopping and one for buying electronics. Credit cards offer various deals and discounts and my colleagues know how to use them effectively.
How to choose the right one?
After knowing your purpose, it is important that you go for the right one. I wanted a card to generate the credit score so I started my research accordingly. I applied for a couple of cards but both applications were rejected because I didn’t satisfy the ‘internal criteria’ of banks even after the inspection at my workplace and my living place.
Then while shopping on Myntra, I was offered a co-branded, lifetime free card. And it was the right one for me. It was satisfying both my primary as well as secondary purpose. I am a frequent buyer of myntra and Flipkart and it was offering great discounts on both platforms. I applied for it and got the card hassle free without any inspection.
Now, I recommend everyone to go for a lifetime free credit card which is offered to you. Don’t run behind those cards that are out of your reach. Without a good credit score, banks will find hundreds of internal criteria (s) to reject your application.
Credit limit & Credit Score
Always keep in mind that it is a credit card and it gives you credit. It is one type of loan you are getting and you have to pay it in the given time frame. Your credit limit depends on your income and how effectively you use your card.
If you are getting your first credit card then the limit will be very less but effective usage and timely payment will help you in increasing your limit. Timely payment will help you with one more thing and that is your credit score. If you maintain a good credit score then your credit limit will increase at regular intervals. Your credit limit, usage and timely payment are directly related to your credit score. Keep this in mind while applying for a credit card.
After I got my credit card, I make the payment of my dues on the same day bank generates a statement. So today, I have a very healthy credit score and my credit limit just doubled.
Pro tip: Less than 30% usage of credit limit and timely payment will help you attain a credit score of more than 800 in no time.
Terms and Conditions ft. late payment
Every credit card comes with terms and conditions and it is important that you go through them. It explains every condition in detail. Most importantly, it also explains the charges and interest rates on late payment of dues. Along with that, it also explains the terms of buying things on EMIs through credit cards.
So my advice is to read the terms and conditions thoroughly before applying for any credit card.
EMI trap and Rewards
Credit card lures you towards the things you don’t need. These things will break your bank and will put you in EMI traps. Banks will convert those bigger transactions into EMIs and will earn a hefty profit from you. If that is your purpose behind getting a credit card then in my opinion, it is really a bad idea.
If you use it well then you can earn a good amount of rewards or cashback. People travel around the world, get free flights and stay in 5-star hotels for free just by using credit cards effectively. If you know how to manage rewards then a credit card is a boon for you.
In short, keep all these things in mind while applying for a credit card. I believe if you use your credit card with responsibility then it can be a great tool in your lifestyle.
I was familiarised with credit cards pretty soon in life. I learnt a lot about proper usage thanks to my father and then through my experience. The tips you have shared must truly be followed for new credit card users as if not followed properly can lead to EMi traps as you shared.
Thanks for answer many of my preconceived notion about having a credit card. I still dont have one. But now I feel I am more informed and can have it safely.
Trust me, I really don’t know many things about credit cards and glad that you shared all these pointers which really enlighten my knowledge.
Credit card is a way of life now for me at least. I agree kneeing your purpose and pros and cons can help you to choose better.
It was not until recently we discovered the benefits of owning credit cards. This is so helpful when people plan to buy their first credit card.
There are ample banks that offer credit cards but definitely one should always look into the terms and conditions before opting for any.
Credit cards are made to ease out financial burdens and plan the expenditure properly. However, people tend to over or miss use them which ends up in bad credit scores. This is a great post for all credit card enthusiasts.