A credit card is a card issued by a bank or a financial institution which enables you to purchase items through credit. You have to pay the bank once the bill of the credit card is generated. The credit card company normally gives you twenty days’ time to pay the bill from the bill generation date. It looks great to a consumer who is struggling to purchase a smart TV or a washing machine, let’s say. But hold on for sometimes and don’t jump to apply for a credit card. There are few things to know before applying for a credit card which you should consider before taking the final decision.
The followings to know before you apply for a credit card:
Eligibility to apply for a Credit Card:
Maximum credit card company has set the minimum guideline to issue a credit card such as minimum income, employer, the address where you stay. Normally, Credit Card Company prefers to have at least Rs 20k income per month of an individual to issue a card. If you are working in a reputed company, it will be easier to get a credit card. Moreover, you should stay in a city to have a credit card.
The banks have set an area limit where you have to stay presently to own a credit card. Those who are residing outside the city limit, banks normally decline to give the credit card to them. Once, I have applied for Axis Bank credit card and I don’t have any address proof in the city. They have declined to provide me a card. After one year when I have applied with proper documents, they provide me the card.
Charges of a Credit Card:
Normally a credit card has three types of charges namely joining fee and annual Maintenance fee. Joining fee is the charge of processing the credit card application. That’s why joining fee can be termed as processing fee also.
Joining or processing fee is ranges between Rs 500 to Rs 5000 depending on the type of credit card.Some credit card company charges the annual maintenance fee which also ranges between Rs 200 to Rs 5000 depending on the type of card.
Presently, credit card companies are waiving off the joining fee and also annual maintenance fee in some cases to lure the customers.
Third is the late payment fee. If you are paying the bill after the due date, the late fee is applicable to the billed amount.
Also Read: Best Credit Card in India with no annual fee
Annual Interest rate:
This is the most important point which you should know before applying for a credit card. Credit card bill is generated after thirty days of spending. After the bill generation date, you have twenty days’ time to pay that bill. Generally, the interest rate starts from as high as 35% per year. And the interest rate is counted from the next day of the bill payment due date. The bill has two components, which you should take care very closely. One is the minimum amount and another is the final amount or billed amount in full.
Most of us have a misconception about this minimum amount that if the minimum amount is paid there will be no interest taken even if we fail to pay the bill. If you pay the minimum amount before the due date, you can avoid the late fee only.
There will be no exemption from the interest charges. In this regard, remember not to withdraw cash using a credit card. Welcome letter normally comes with a cash withdrawal limit. Cash withdrawal attracts interest from the same day when you withdraw cash.
[Tweet “If you don’t take good care of your credit, then your credit won’t take good care of you.” ― Tyler Gregory”]
Choose what you need:
There are different types of credit card offered by banks and financial institutions. Someone is fond of shopping and for someone card having benefits on fuel may be suitable. So, access your need or in which category you will spend most with your credit card. According to the requirement, choose a type of credit card. Check the available offers in the market. Compare the benefits and charges of those cards and finally, choose a card to apply. You can check out the Citibank credit cards for great benefits and offers.
Check your Credit Score:
You can check your credit score before applying for a credit card. A high credit score increases your chance of getting the card. The credit score actually helps you to get any kind of credit i.e. loan, credit card etc. If you have a credit score of more than 750, it will be easier for you to have a credit card. You can check your credit score here.
Credit card usage is going up day by day. As many people are coming to the formal banking system, credit card usage will also grow up continuously. Some persons are facing difficulties in managing this easy credit. They use the credit card to fulfill their wishes and unable to repay the debt. For those, it is always advised to use the debit card instead of credit card.
If you find difficult to manage the credit card debt read the article ‘How a Credit Card can ruin your Finance and How to Protect it‘.
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