As you start earning or receive a hike, it is common for you to seek external financing to purchase high-value items. And, what can enable you to do so than your first credit card.
It can not only help you make big-ticket expenses with EMIs but also improve your credit score. A higher credit score further makes you more eligible to avail loans of higher amounts.
Before opting for your first credit card, here are several aspects that you should know about. It will help you to use them smartly –
- Interest rate – Since credit cards are a type of personal loan, financial institutions will charge interest. However, financers will only charge interest on a credit card if you fail to pay your bill within the grace period (usually 20 to 25 days) or make a late payment. Accordingly, you need to pay off your credit card bill before the due date in full to avoid any accrual of interest. Make sure to know about credit card interest rate calculation to plan your finances properly.
Nevertheless, to avoid falling into any debt trap, avail your first credit card from a financial institution or NBFC which has affordable interest rates.
- Emergency personal loan – Some credit card companies allow you to avail of an emergency personal loan against the available cash limit of your credit card with zero interest for a period of 90 days. You can opt to repay this loan in 3 EMIs.
- Cash withdrawal from ATM – When you withdraw cash from ATM with your credit card, interest is charged on the withdrawal amount.
Even so, some credit cards like the Bajaj Finserv RBL Bank SuperCard allow cash withdrawal from ATMs without charging any interest for a period of 50 days.
Additionally, the company also provides pre-approved offers for a quick and efficient credit application process. These offers are available on other financial products such as personal loans, business loans, home loans, etc. You can check your pre-approved offers by entering a few essential details like your name and contact number.
Application procedure and documents required
You should know the application procedure and the documents needed to avail of your first credit card. The steps to apply for a credit card has been given below –
- Visit your credit card company’s official website.
- Select the link for the online application form.
- Enter the required details in the form.
- Submit the application form along with the necessary documents.
The list of documents required during the application process is as follows–
- Proof of income like form 16, income tax returns, latest payslips.
- KYC documents like Voter ID, PAN card, passport, driving license, Aadhaar.
- Proof of age which includes birth certificate, passport.
Aside from the above documents, lending institutions may ask for additional documents to process a credit card.
- Fraud protection – Credit card use is mostly directed towards online transactions. The same also increases the chances of fraudulent activities and cybercrimes. Accordingly, one should apply for a card that comes with features like in-hand security and zero fraud liability cover. Additionally, one should also know about the ways to protect his/her credit card from being hacked.
- Additional fees – Lending institutions charge joining fees, annual renewal fees or fees for late payment of credit card bill. Hence, before availing the first credit card, one should have an accurate idea about the fees charged by a card issuer.
- Reward points – One of the most significant advantages of credit cards are attractive reward points. Lending institutions offer these on almost every transaction.
You can redeem the accrued reward points to avail Christmas gift vouchers, discounts, and cashback on shopping with partner stores. There are several things that cardholders can do with their credit card reward points; for instance, make down payments for big-ticket items.
Since there are several types of credit cards available, one should opt for a product that complements his/her spending habits and requirements. For instance, an individual who travels a lot should apply for a travel credit card as it provides discounts on flight tickets, hotel bookings, etc. Subsequently, it will enable an individual to enjoy the benefits offered by his or her credit card.