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2-min read

Things You Need to Know Before You Apply for a Credit Card

Credit cards come with various benefits, depending on the kind of person you are, and your repayment ability.

Updated:May 1, 2019, 5:57 PM IST
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Things You Need to Know Before You Apply for a Credit Card
Credit cards come with various benefits, depending on the kind of person you are, and your repayment ability.
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A credit card has, in today’s world, transitioned from being a luxury into a necessity. Be it shopping for groceries, reserving a table at your favourite restaurant, or booking flight tickets for that big vacation; a credit card is a boon when it comes to nominally big expenses or larger ones. The fact that it doesn’t leave a big chunk in your monthly savings in one stroke, is reason enough to apply for a credit card. But with hundreds of issuers out there, which one is the best for you? Here’s a list of things you need to know and research before getting a credit card of your own.

Check your eligibility before applying:
Everyone with a bank account has a credit score. The company issuing you a credit card needs a guarantee that you are reliable and trustworthy, and earn enough to repay the monthly credit card bills that you’d be receiving; which is determined by your credit score. (Anything above 750 is a good score). If it is low, the application gets rejected. And every time an application gets rejected, the credit score goes lower. So check that box before applying so that it gets accepted in one go.

What kind of a credit card would suit you best?
Credit cards come with various benefits, depending on the kind of person you are, and your repayment ability. Are you a frequent traveler? A travel credit card is your best bet as it will provide you with extra miles. Love shopping? Go for the Rewards credit card that provides you with points, cashback and offers on each shopping trip. It’s very important to figure this out before applying for one.

What are the interest rates?

With a credit card, you are basically loaning money you don’t have. Along with an annual fee, the issuer bank charges you an interest rate for extending these services, which depends on bank to bank. Figure out what interest rates are being offered, and whether they are feasible to you, or are you being duped and being charged more than what you should be.

What are the hidden costs?
Many credit card companies don’t mention a number of costs upfront, such as renewal fees, installment processing fees, late payment fees, joining fees etc. make sure you are well versed with all of the above before you apply for a credit card. If you have issues later and would be tempted to cancel your credit card, it still affects your credit score.

Do you really need it?
Granted, a credit card is really helpful in case of emergencies as one might not have a huge amount on hand at all times. But the ease with which one tends to overuse a credit card is what no one talks about. Since money is not being visibly deducted from the bank account, the human brain is tricked into thinking they have a lot of money; which is in fact not true. One may end up in the vicious cycle of ‘spend more, owe more, repay more’, which leads to debts and high interest rates.

To know more, click here.

This content has been created in association with YONO SBI
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