Getting a credit card is a huge milestone, and as excitedly as one may get to buy it, one must be equally careful and cautious of the terms and conditions associated with it. There is no doubt in the fact that a credit card has hundreds of benefits associated with it; but the fact that improper usage of the same hurts your financial well-being quite badly, let alone leaving you financially stressed.
To help you move cautiously through your credit journey, we have curated a list of dos and don’ts as you apply for a credit card for the first time.
Things to Know Before Getting a Credit Card
Before you move ahead in the process of your credit card application, make sure that you tick mark this checklist about everything you need to know about credit cards-
- Explore all the types of credit cards: Looking at the list of benefits provided to you using various types of credit cards, you may be attracted to the ones that you actually do not need. Hence, while deciding which credit card you are going to buy, identify your financial needs first and then buy the card that fulfills all your needs, even if it offers lesser benefits as compared to the others.
- Ensure that you have a regular income: Buying a credit card may seem like achieving a huge milestone. However, you should go ahead to buy one only if you have a stable income. This is essential because not having a regular monthly/annual income may lead you into situations where you may not be able to pay your bills, and may eventually fall into debt traps which will hamper your financial status badly.
- Start with spending less on your Credit Card: Since you are just a beginner in your credit card journey, you should start slow. Begin with spending a lower amount on your credit card so that you eventually understand how a credit card actually works and how well you can balance your finances with a credit card.
- Read through the terms and conditions thoroughly: As it is the first time that you are buying a credit card, you must be aware of all the terms and conditions beforehand. Read through all the documents carefully and make sure you understand everything properly. You can contact your bank in case of any queries.
- Learn about all the additional expenses: Credit cards have a lot of additional expenses associated with them. If you are not aware of these credit card charges before buying the card, you might feel disappointed and exploited later. Hence, learn about all the expenses that you may have to incur later. Your credit card may have an annual fee, or additional charges on foreign transactions, interest rate charges on late payment of bills, extra charges on cash withdrawals, etc. are some of the expenses that may not be focussed upon initially as you buy a new card.
- Maintain your credit score: A credit card is one of the most amazing financial tools that can help you improve your credit score. Effectively using your credit card will help you improve your credit score, let alone maintaining it. Try to pay your full dues well before the last dates, do not spend more than 60% of your credit limit unless absolutely necessary are some of the things that will help you improve your credit score in the long run.
Read More: What is a Good Credit Score
Check out a list of dos and don’ts to follow as you get your first credit card-
| DOs | DON’Ts |
|---|---|
| Effective usage can improve your credit score | Improper usage can hurt your credit score badly |
| Keep your credit card safe with yourself | Losing your credit card may lead to misuse and fraudulent transactions |
| Use your credit card to meet emergency expenses | Credit cards offer borrowed money; so do NOT overspend |
| Buy the card of your need and use it effectively to earn reward points | Keep a check on all the credit card offers such as the rewards and discounts on your card; do NOT ignore them |
| Pay your bills on time | Late payment of bills will lead to high interest charges |
FAQs
Is it safe to buy a credit card?
Yes, it is absolutely safe to buy a credit card. All credit cards are secured with a 4-digit personal identification number, that is used to verify the owner of a credit card. A credit card's PIN is like a signature that verifies your identity and helps you protect against any fraud.
When should I get my first credit card?
You can get your credit card as soon as you start earning. You can also apply for a credit card specifically for students if you are in college. However, when you have limited income, you must use your credit card cautiously. Generally, most credit card companies have a minimum age limit of 18 years to be eligible for a credit card.
Why is it important to have a credit card?
It is not "important" to have a credit card. Instead, it can be said that it is beneficial to have a credit card, owing to its numerous benefits. For instance, a credit card helps you to meet any major or urgent financial expenses at the luxury of repaying the amount later. Additionally, with effective usage of a credit card, you can also earn discounts, cashbacks and reward points which can be redeemed on later purchases.
Are credit cards and debit cards same?
No, credit cards are different from debit cards. When you make purchases using a credit card, the money is deducted from your credit limit, which is offered to you by your bank. On the other hand, when you make purchases using your debit card, the money is deducted from your account balance. To use a credit card, you do not need to have the money before making the purchase, which is not the case with debit cards.
Is it expensive to get a credit card?
It is not expensive to get a credit card. However, when you buy a credit card, there are certain additional expenses associated with it. These expenses include annual fee, cash withdrawal charges, interest rates charges on late payment of bills, etc.
Are there any eligibility requirements to get a credit card?
Yes, there are a few credit card eligibility conditions. These conditions require the applicant to be at least 18 years of age, an Indian citizen (in a few cases), regular income, good credit score, etc.
