Credit Card Application – 5 Tips For First Time Credit Card Users

admin | May 15, 2019

If you can use a credit card sensibly, it can help you pay for your expenses during a crisis and even improve the Credit Score.

However, before you can do that, you would need to apply for a credit card that suits your needs entirely.

It is vital to know as being a new user as you may make a wrong choice and end up in a debt trap.

Hence, before you go ahead with the credit card application for the first time, you need to follow some handy tips. Knowing some basic aspects beforehand will help the first time credit card users use it effectively. Read on and explore more!

Check your Credit Score

The Credit Score is one of the most vital credit card eligibility criteria. It shows your creditworthiness to a lender how you have handled the finances in the past.

It is also based on how you have repaid the dues and credit card limit or other limit used.

Your CIBIL Score is calculated by CIBIL, which is a three digit score ranging from 300 to 900. Anything at 750 or more is a good score to get the credit card with a higher limit.

Hence, check if your Credit Score is 750+ or not.

Find a credit card suiting your needs

The next thing is selecting the best credit card that may suit your needs as per your financial requirement.

Someone may want a card giving free movie tickets; some may want a fuel surcharge waiver card and someone with higher rewards.

Hence, you can compare all card offers on a third-party website to know which credit card suits your needs the best way.

Some people also keep 3-4 credit cards these days each suiting one need.

However, credit cards such as the Bajaj Finserv RBL Bank SuperCard can offer you the benefits of so many amazing features as it’s a 4-in1 credit card.

It can also provide you with 20,000 reward points as a welcome bonus.

Know about the credit card payment system

Before you sign the application form, you should also be aware of the payment system. A credit card bill contains two types of amounts – one is the minimum amount due, and the other one is the total amount due.

The minimum amount due is a percentage of the total amount due. You can pay the minimum amount due, but the remaining amount will continue to cough up interest unless you pay it.

Hence, paying the minimum amount due is a marketing gimmick so that you keep paying more on what you have utilized.

Paying the minimum amount just protects you from not being reported to the credit bureaus as a defaulter.

But, it should be paid only during financial emergencies when you can’t pay the full amount.

Also, if you don’t pay even the minimum amount due on the bill within 90 days from the due date, then banks may treat the credit card as a non-performing asset (NPA).

In such a case, the situation will hamper your Credit Score adversely, and you may not get future loan approvals at a lower interest rate.

Be aware of the credit card penalties

Did you know that making late payments will enable the lenders to charge you a penalty?

Yes, the penalty amount may vary from lenders to lenders and may range from Rs.400 and 700 or more.

Thus, not paying the bill on time will not only lead to payment of higher interest rate but even penalty charges. Therefore, ensure to make payments on time and by the due date.

Know where to draw a line

Experts suggest not using the credit card limit more than 30-50% if you don’t want to fall in a debt trap and hamper your Credit Score.

Hence, always know the credit limit utilization and its payment that your existing income can support.

You can increase the credit limit utilization if your salary increases but after asking a higher limit from the lender.

Credit cards are one of the key financial tools that you may own these days to manage and pay for your expenses without borrowing from friends.

However, being aware of all credit card basics can make you manage it smartly. Thus, before filling your application form, you should ensure to follow the discussed tips.

Leading creditors such as Bajaj Finserv presents pre-approved offers on cards, EMI finance, home loans, personal loans and other financial products. It is to make your overall loan procedures hassle-free and faster.

You can check out your pre-approved loan deals today after sharing some basic credentials such as your name and mobile number.

Author Bio:

Gaurav khanna is an experienced financial advisor, digital marketer and writer who is well known for his ability to predict market trends. You can find Gaurav on Linkedin.