Are you getting ready to apply for your first credit card? This is a significant milestone for you. It means that you have met certain criteria set by the bank to be eligible for a credit card. But do you know the basics of having a credit card? Do you know how to use it responsibly? Even if you do, let’s review together. In this article, we will cover 10 points you must know before you start using your first credit card. Let’s dive in!
- Creditworthiness:
Always keep an eye on your credit card score since any credit lender will be taking a look at your financial history and will then decide whether you are eligible for credit. Reviewing your credit score before you apply for credit can help you better understand your financial standing so that you can make the necessary improvements to increase the chances of the credit being approved
- Rates and fees:
Credit card fees are known for their affordability, but understanding them is necessary before you apply for a credit card. In order to get the best credit card at an affordable price, you need to check out the credit cards offered by different credit card bank and financial institutions. Look for the ones that fit your financial situation, and at the same time, you get the most rewards and offers. Word of advice: sometimes it is wiser to let go of certain rewards, schemes, and offers for lower fees.
- Make timely payments:
Uncle Ben once said, “With great powers comes great responsibilities.” The same applies to a credit card as well. You must prioritise your expenses, and spending smartly should be a habit that you instil. One of your top priorities must be to pay your credit card bills, such as your HDFC card payment, on time. If you do so, you will be charged late fees, and your credit score will be positively impacted.
- Paying a late fee is damaging:
When you fail to pay your credit cards bills on time, you incur late fees, penalties, and monetary damage. As mentioned before, it impacts your credit score and also damages your reputation as a borrower, so when you want to apply for a loan in the future, you might have a hard time getting it approved, or you might have to pay a higher interest rate. So hence, never default on your credit card payments.
- Interest on credit cards is avoidable:
Remember that interest is charged when you borrow credit. You must also know that interest charges are high, and credit bureaus monitor your credit usage and repayment schedule to provide you with a credit score. You can avoid these interest charges by paying the outstanding amount in full by the due date. Doing this allows you to use credit for a grace period and have no interest payout.
When you apply for a bank credit card for the first time, you are taking a step toward financial independence. It’s important to be mindful of your spending. Paying your fees on time, maintaining a good credit score, and conducting thorough research are crucial steps to take. It’s essential to be responsible when managing your finances.