A credit card is basically a payment system where you essentially borrow money from the bank that has issued you the credit card to make purchase. Credit cards have plenty of benefits if used responsibly.
Things to remember before getting a credit card
For someone who is taking that credit card for the first time, there are a few things that you need to consider and keep in mind. Like;
Know how a credit card works –
Through a credit card a bank offers you a line of credit or short term loan to an agreed limit, to make purchases, balance transfer and cash advances, on the condition that you pay back the loan before or on the due date to avoid any kind of interest and late payment fee charges.
Know how credit card interest is calculated –
An understanding of it will help in deciding on a credit card.
Know how minimum payments are determined –
This knowledge comes a lot handy in some situations.
Type of Credit card –
There are two types of credit card – secured and unsecured cards. In secured cards you need to make a refundable cash deposit equal to the credit limit. In unsecured cards, there is no cash deposit and the credit limit is decided as per your income level and credit history and as such the credit limit on your first card might be low.
Grace period for payments –
The bank gives you a grace period of 21 to 52 days from the time you received your bill, to pay back the amount you borrowed without any extra charges. However, if you don’t make the payment by that time then you will need to pay interest on top of the amount.
Annual Fees –
Almost all secured cards have annual charges, while certain unsecured cards have no annual charges. If you are planning to get a high value rewards unsecured card, then you will be charged an annual fee.
Late Payment Fee –
This is charged when you don’t make even the minimum payment by the due date.
Credit cards help with building credit history –
Credit cards are a wonderful tool to build a credit score, only if they are used responsibly and dues are cleared regularly on time.
A majority of banks offer credit card schemes like IndusInd bank credit card, rbl, etc. It is necessary to select a credit card after a lot of research, which includes considering your spending habits, the interest rate offered, credit limit and fees and penalties.
For instance in the IndusInd bank credit card the bank offers exceptional credit limits, tailor made privileges and an assortment of credit cards to choose from – super premium, premium and co – branded. The best thing is that now you can easily apply for these credit cards online. You can also check on your application status online by either visiting on the bank’s website or just Google a particular bank like – rbl credit card status and you would automatically be shown the relevant website to find out about your application status.
Credit card is a great payment tool if you use it responsibly and be on time with the bill payments. Otherwise it will drag you into a very messy financial situation. So be smart and use it responsibly.