A credit card can be a great tool to help you out during tough times or when you hit a rough financial patch. It can provide you with emergency funds to tackle with those rainy days or clear out that surmounting debt. As we move forward on becoming a digital economy and instant credit card approval schemes, the use of credit cards is increasing and is considered one of the most feasible alternatives for payment. Credit cards don’t come empty handed and brings hoards of rewards and benefits on its purchases too. A credit card if used with utmost care can prove to be an immense boon but if not managed properly you may end with a low credit score and high debt. Often times we don’t consider certain important aspects when we apply for credit card, and grieve on our negligence later. However, we have a garnered a list of things to consider before applying for a credit card and making the most of it.
Considering the fees, interest rates and benefits
Whether you’re purchasing a mobile phone online or availing a credit card, it’s of pivotal importance to look for the fees, interest rates, and the benefits it is offering. There are several credit cards offered by the lenders and financial institutions to satisfy your diverse needs, so why go for something which you might regret later? Before availing a credit card you should always carry an in-depth research and look for a card which is most suitable for your needs. There is a diverse range of credit cards available from travel cards to lifestyle to corporate cards. Thus, understanding your financial needs and objective is the foremost thing to do before availing a credit card. Always look for a card providing good interest rates and benefits on your purchases.
Most credit cards come with a joining fee and an annual fee, if you’re only availing a card to pay off debt then you should go for a card with low joining and annual fee.
Checking your credit card eligibility
Whether you’re applying for a credit card for the first time or availing an additional one, it’s important to check your eligibility before applying for a credit card. Factors like your credit score, credit history, and income statements play a huge role in the approval process. Usually, any financial institution or lender considers a score above 750 as an ideal score. Checking your credit report won’t affect your credit score, and will help you understand your financial standing. Therefore, it is imperative to check your credit report before availing a card.
Make sure to have all the relevant documents
You can easily apply for a credit card in this digital era, but it also requires submissions of some documents too. Documents like government-issued photo ID cards such as PAN card, driving license, also address proof like electricity bills, water bills and telephone bills are also needed. However, the requirement of documents differs for a salaried and a self-employed professional in terms of income proof.
If you’re a salaried individual, the key documents that you need are-
–> Salary slips for the last 3 months
–> Bank statements for the past 6 months
And if you’re a salaried professional, key documents required are-
–> Latest CA certified IT returns
–> Proof of business continuity and ownership
Keep these documents with you up and ready, when you apply for a credit card. If you are applying for a credit card online, you need to upload these documents to the portal.
Comparing and choosing
Financial institutions or banks offers a diverse range of credit cards. Each suited to fulfill the different needs of the individual. A customer can choose from lifestyle cards to travel cards depending on its financial objectives and wants. If you want to make your travel cheaper and also earn benefits associated with travel. Then it makes sense to choose a travel card. If you want cash back on your purchases, then you should opt for a cash back credit card. Always compare and then choose the credit card, don’t get lost this dense forest of numerous credit cards. Choose a credit card which is offering the best services in your interest.
Related Article: Why And How To Use Your Credit Cards Effectively
Going through the fine print
Reading the credit agreement and understanding its each and every aspect is the most important thing to do before availing a credit card. You need to understand the key aspect of a credit card like its APR(annual percentage rate), interest-free period, balance transfer offers, the rewards program, cash withdrawal limit, credit limit, and over-limit fees. It’s imperative to take time out and understand all such terms associated before availing a credit card. Otherwise, you might end up getting an unpredictable not-so-sweet surprise after availing the credit card.
Paying off the entire credit balance every month
Most people avoid paying the entire credit card balance every month, thinking that paying the minimum amount due is enough. Paying only a minimum amount due is the worst mistake a credit card holder can do. In short term, this might feel like a burden has been relieved. But the problem starts when that unpaid balance comes bouncing back. The best way to increase credit score is by paying the full amount at the end of each month.
Keeping credit utilization between 20-30%
Whether you’re a first-time credit user or not, it’s always advisable to keep the credit utilization limit between 20-30%. This is the best way of maintaining a healthy credit score over time. Keeping the utilization limit between 20-30% is necessary. As it gives a good impression to your respective financial institution and also reflects positively on your credit report.
Credit cards are emerging as the most viable option and paving our way towards a cashless society. So, it’s becoming imperative to fully understand this important tool and make the most of it. We hope that whenever you apply for a credit card, these few tips would help you make the most of it. If you are looking to apply for a credit card with an instant approval process, head over to the IndiaLends website now!
