Things to know before applying for your first Credit Card
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22 MAY, 2020
Credit cards have become the most important financial tool in today’s world. It is the go to mode of payment for a number of purchases and assists in making convenient transactions. From purchasing groceries to making flight bookings, a new credit card is one of the easiest modes of payment. Are you planning on getting your first credit card? Well, you may have several questions on your mind when choosing the right one. It is essential to make the right pick or you can end up into a financial down pit.
Here are some things that you must remember before you apply for your first credit card:
Rate of interest – Credit cards either come with a fixed or variable rate of interest. When the rate is fixed, you will know the cost levied with each billing cycle. However, with a variable interest rate, it can fluctuate. You must consider the rate of interest very closely and pick a suitable one.
Rate and fees – Credit cards come attached with multiple fees and penalties attached. The most common charges include fees on cash advancements, transactions, balance transfers and more. If you pay your bill late or surpass your credit card limit, there is a fee that you will have to pay. These fees and charges can drain your funds and you must look for one that comes with reasonable charges. Keep away from cards with exorbitant fees.
Rewards Programs and Benefits – Credit cards typically come with reward programs and incentives that you are granted upon making spends. Card issuers also have tie ups with different brands and offer a range of benefits in collaboration. This includes rewards on flight bookings, grocery and clothing shopping, and much more. These incentives can be great and can help you save a lot of money when used wisely. However, you should not go overboard with spends just to earn and redeem rewards.
Apart from the above listed factors, you must also understand the eligibility required for application of a credit card. Typically, banks require you to fulfil several essentials such as the acceptable age bracket, having a steady income through employment or self-employment, producing identity proofs and more. After you apply for a credit card, the bank may take 7 to 10 days to review and approve your application.
Read more about 4 ways to ensure a smooth approval of a credit card here.
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