IndiaLends Advisory

By IndiaLends Advisory

Aug 14, 2018

Financially Independent India | A Credit Card Guide For Millennials

It’s been 72 years since we embarked on the journey of independence. The greatest thing that we have achieved since then is the fact that even though the colonists left our country penny less, we’ve been able to get back up on our feet and became financially independent. And the most important asset that India has today is its millennials- young minds, on their way to achieve greatness. They are not hesitant to adapt to new things since they were born and grown up in an era of invention. But they are not foolish too. They weigh their options before they act. They want to be one step ahead in everything- be it a technological advancement or being financially independent. Being new to credit can be an obstacle for them. But credit cards can turn out to be great in such a situation. Here are a few tips for the millennials-

Related Article: Applying For A Credit Card- Key Points To Remember


Few Basic Credit Card Terms That You Should Know:

Since you are going to be financially independent, it is only fair that we introduce you to the language that you are going to speak in from now. Here are a few terms that you will hear quite often and you should understand

Credit Score:

A three digit number that you have to look after diligently if you intend to take loans in your life. This score is indicative of your creditworthiness as a borrower. All banks and NBFCs give a huge weightage to this score before sanctioning a loan in your name.


APR stands for Annual Percentage Rate. It is basically a percentage that represents the actual yearly cost of funds over the running course of a loan. This cost includes any fees or additional costs associated with the transaction but it does not take compounding into consideration. This is the sole reason why most people find APR to be misleading.

Annual Fee:

Annual Fee is one of the most common fees that credit card providers charge every year from their customers to provide their services. You might want to check the annual fee on the card that you are thinking of buying. Do not confuse this with Joining Fee which is a one time fee when you take the card.

Billing cycles:

As the name suggests, the time between two billings of your credit card is known as the billing cycle. It is extremely crucial to understand your billing cycle to make full use of the credit card. For most credit cards, the billing cycle varies between 28-31 days. At the end of a billing cycle, you are issued a statement for all expenses made during that billing cycle.

Credit utilization ratio:

Another pivotal point to remember when you are using credit cards is the credit utilization ratio. When you get a card, you entitled to a maximum limit. This limit indicates the maximum amount that you can spend, using your credit card. The important part to remember here is that you should not use the entire limit as it reflects poorly on your credit report. Try keeping your credit utilization close to 40%.


Common Mistakes That You Should Not Make:

As a millennial, you might often think that you don’t need a credit card. But as a smart millennial, you would know that a credit card is the best tool to build a credit score. And in turn, the ultimate way of getting the best deals on loans and other credit options. Cash is fine for today, but a credit card is the way to go for the future. You need to understand what are the pitfalls that most people become a victim of while using credit cards. Only then you can avoid them in the future. Here are few lessons towards becoming financially independent:

Not Keeping A Track:

Being financially independent means you have to keep a track of your money. Where you are spending most of your money and how your credit score is being affected by those actions. This is something that you must be aware of at all times. Checking your credit score every month is crucial. If you notice any errors, get them rectified immediately.

Not Paying Bills:

Being a defaulter is not the same once you are out of college and into the real world. Earlier it just meant being thrown out of the class. Now your wallet might be affected if you miss out on a payment. Since the beginning, make it a point to pay all your bills in full and on time.

Maxing Out The Credit Card:

It only seems fair to spend everything you have (or actually don’t have) when you are in this stage of life. But actually, it is the stupidest thing you could do for your finances. Ensure that you use less than 40% of the credit you are entitled to use.

Not Choosing The One:

Choosing the right credit card is as crucial as finding love in life. You might have to suffer if you do not choose the right one. Spend time in researching about the best options available and align the cards with your lifestyle. Weigh how it will be beneficial to you. Only then make the decision.


Related Article: Why And How To Use Your Credit Cards Effectively


Independence is a gift that our ancestors gave us. We need to cherish it and understand its importance. The best way to do it is to utilize all the knowledge we receive from the experiences of the past in making the future better. Don’t wait to apply for your first credit card and get on the ride to being financially independent. If you have any doubts regarding personal finance, follow the IndiaLends Blog or let us know in the comments below.

Wishing you all a very HAPPY INDEPENDENCE DAY from the IndiaLends family.


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