Things about Credit Card you must know

Credit cards have become widely popular owing to their default perks, reward points, and lucrative offers. They are amongst the most popular money tools these days. But things are not always simple and easy, and there are a lot of things that the user needs to keep in mind while using credit cards. 

Here is a list of the 10 most important points that users must keep in mind while apply credit card:

1. Income

The first and the most significant factor for using a credit card is your income. Every bank will first take a look at your income level before lending a credit card. The higher the salary, the greater the chances of getting a credit card. Another advantage that your income provides is that it helps your bank to decide on your credit limit.

      2. Current relationship with the bank

It is always recommended to opt for a credit card from a bank where you had or still have a savings account. Being an account holder in a bank or having multiple fixed deposits increases your chances of getting a credit card.

      3. Credit History

Credit history and credit score are important for getting credit cards as CIBIL or the Credit Information Bureau Limited keeps a record of every person who is associated with banks. It also keeps a record on any loans( education loan, home loan, personal loan etc.), and checks if all the payments have been covered.

      4. Purpose

Before getting a credit card, it is important to know why you want a credit card. Once the purpose is clear, you can also decide what credit card you want. There are different types of credit cards available in the market, such as shopping cards, travel cards, offer cards, etc. Once the purpose is clear, the decision becomes easier.

      5. Annual fee

A lot of credit cards come with an annual fee. While some credit cards have a reasonable fee of Rs 500, others have an extremely high amount of up to Rs 10,000. There are also credit cards that do not charge any annual fee. Therefore, it is advised to go through the details before making a decision. Credit cards that have a decent annual charge usually offer lucrative offers and reward points.

      6. Credit cards against Fixed Deposit

If you have a fixed deposit in a bank, you can avail a credit card easily. Theses are called instant credit cards. This option is very beneficial for those who are facing rejection from banks due to their bad credit score.

       7. Interest Rate

It is wise to choose a credit card with the lowest interest and maximum benefits, as ideally, all credit cards come with an interest rate. If you are unable to pay your credit bills on time, you will be charged with interest.

       8. EMI Facility

Credit cards offer an EMI facility which is very useful for savings. In case of a costly purchase, instead of spending all your savings you can go for EMI on your credit cards to make monthly payments. It also eradicates the need to take loans.

       9. Hidden Charges

You need to be cautious of this point as credit cards come with hidden charges under the names of a one-time fee or processing fee or joining fee etc.

      10. Credit limit

The credit limit is the capacity offered by your credit card to make purchases. The higher the credit limit, the more you can purchase. But it is advisable to keep your expenses under check as a low credit limit is better.

To conclude, once you get hold of your credit card, be very careful with its usage. You need to keep your purchases within check as the balance amount is not deducted from your savings instantly, which creates a misconception that you still have money left in your card.