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The decision to get a credit card for the very first time requires a great deal of research and thought. There are plenty of parameters for you to consider while you apply for a credit card such as why a credit card would be beneficial for you, what are the documents you’d need to submit, what must you consider and so on.
Your first credit card could either open you up to a whole new range of financial opportunities or plummet you into a major financial crisis. Hence, it is essential that you opt for a credit card that caters to your financial requirements and doesn’t pose a threat to your financial welfare.
Here’s why getting a credit card might be a good decision for you:
To Strengthen Your Credit
A good credit score is a prerequisite for all financial borrowings. Whether you decide to buy a house, a cellphone or property, your credit score and the resulting credit report is evaluated to determine your creditworthiness.
A credit card can help you build your credit score if you make timely payments and manage your debt well. Your credit card issuer will report the transactional activities of your credit card to national credit bureaus such as Equifax, Experian and TransUnion. These bureaus will utilise this data and create a credit report that will be based on your credit score.
For Convenience
Credit cards are accepted worldwide thus making them an extremely convenient mode of payment. You can use them online, or in person. They are more convenient than carrying cash, in the sense that if your credit card is stolen, you are protected against any fraud. Additionally, when you travel, credit cards come in handy for ticket and hotel booking due to their rewards and benefits on such activities.
Moreover, when your extravagant expenses make your salary slip out of your hands, credit cards can help you climb out of your financial hole by giving you the much needed purchasing power. You could also make purchases through a mere tap or even through your phone.
For Protection Against Fraud
In the event of a credit card theft, and the resulting unauthorised transactions, the fraud protection that credit card companies offer, will safeguard you against any such fraud liabilities. You will not be held responsible for the purchases made through your credit card post theft.
This benefit will imply, provided you notify your credit card company at the earliest.
To Earn Rewards
One of the enticing perks credit cards offer are its rewards. There are various kinds of credit cards and each of them offer a variety of rewards on flyer miles, travel bookings, lounge access, hotel accommodations, and so on and so forth. Hence, it is important that you apply for a credit card after having carefully considered what sort of a credit card would benefit you the most.
To Gain Benefits
Credit cards offer a multitude of benefits that make them a tempting choice. Some of the perks include fraud protection, complimentary credit score checks, maximised purchasing power, airline benefits, discounts on hotel accommodations, complimentary memberships, free OTT subscriptions, cashbacks, and the like.
To Procure Welcome Bonuses
Welcome bonuses are great incentives offered by credit card companies that help you earn reward points or welcome vouchers on achieving a certain spending limit within a stipulated time. These welcome bonuses can at times include waivers on annual fee as well.
To Acquire Introductory APR Periods
Introductory APRs are generally lower than standard Annual Percentage Rates (APRs) and are provided as an introductory offer when you get a card for the first time or during balance transfers. They last for a particular period of time and can be quite beneficial to a first-timer.
Credit cards are a convenient mode of payment that are equipped with rewards, bonuses, and such other alluring benefits. However, certain conditions such as minimum age, annual salary and residential status have to be met in order to apply for a credit card.
Additionally, you will be required to submit documents for proof of identity, address, age and income such as Aadhar card, Passport, Voter ID, Driving licence, PAN card, utility bills, latest salary slips, and such others.
Getting a credit card for the first time is a huge responsibility that demands you to analyse the options available to you.
Here are certain aspects that you need to consider while you get a credit card:
Type of Credit Card
There are a variety of credit cards for you to choose from and you’re the best judge of the kind of credit card you should get. Based on your financial needs, you can opt for a card that will be the most serviceable for you.
Credit Limit and Credit Score
Your credit score plays an imperative role in determining whether or not you qualify for a credit card. Based on that score, your credit limit is decided. Therefore, make sure to set all your financial affairs in order before you apply for a credit card. A credit limit that is about one to two times your monthly expenditures should be able to help you cover any added expenses.
Moreover, you can utilise your salary slips to estimate how much additional amount you’d require to manage your finances while having enough to spare to pay out your dues and maintain a fine credit score.
Additional Charges
In addition to choosing the right type of credit card, you must be aware of any additional fees associated with the card such as annual fee, charges on cash advance, transfers, foreign transactions, etc.
Late Payments and Grace Period
It is essential to be mindful about your credit due dates since they incur late payment penalties. This will not only harm your credit history, but will lower your credit score as well.
On the other hand, if you manage to clear the dues within the provided grace period, you will not be charged any interest on your transactions.
Credit cards are quite helpful when used prudently and can help you get numerous benefits. However, you must be responsible with the way you utilise a credit card, especially your first one. This will help you develop financial discipline that will be advantageous in establishing a remarkable credit history.
