Credit cards are popular even among those who do not use them. One sees them everywhere — from Hollywood flicks to payment options of e-commerce sites. However, millennials who have still not applied for a credit card are largely afraid of overspending. Sure enough, credit soon becomes a habit, and one does end up buying things on a whim.
That being said, there are no further negative aspects to owning credit cards. Credit cards serve different purposes, and you need to be aware of them before you apply for a credit card online.
You must also understand your credit card eligibility before you make a decision. Some credit cards require a minimum salary as a part of the eligibility criteria, and there’s a good reason for it. Let us look at some factors you should know before you start applying for a credit card.
Not All Credit Cards are the Same
Credit cards serve different purposes, and that is why you might have noticed that they have different levels. Some cards come with zero annual charges, while others cost you a significant annual fee. The first thing you should do is go through the salient points of a credit card before you consider it.
Question yourself whether the perks on offer really correspond to your needs. Some cards are good for online shopping, while others are premium cards that cut you great deals at airport lounges. If you feel that you would make sizable savings by paying with the card, you should opt for such a card. Obtaining a credit card today is easy; to get the credit card, apply online by visiting the issuer’s website, and by submitting a few basic details and filling out an application form.
Income is a Factor
Some credit card issuers take your income seriously. There is a good reason for it; they are offering you credit and do not want it to turn into a bad loan. You should focus on this point as well. Calculate the time you will need to pay off a loan and whether you are comfortable with the rate of interest charged. You are the best judge of your financial situation. Make sure you still have a healthy amount in your hand after the monthly payments for a loan are debited.
Penalty on Late Payment
This point is one of the reasons why the income factor is so important. Make sure your monthly dues are commensurable with your income. Paying your dues late can be disastrous in many ways. Other than affecting your credit score, it will also attract late fees. Even if you manage to make the minimum payment required to avoid a late fee, you will still need to pay interest on the outstanding amount.
Learn About Fees and Charges
Credit cards offer various facilities like cash advancement, cash withdrawal at ATMs, or even foreign transaction cess. Make sure you learn about every possible charge imposed by the issuer before you apply for a credit card.
Start With a Low Credit Limit
If the situation permits, do not apply for a high credit limit at the very beginning. Take it slow. Pay your credit amount, however humble, on time. This habit pays off in the long run with regard to your credit score. Once your credit score crosses the 650 mark and inches towards 700, you can expect to be eligible for generous loans. However, always go through the credit card eligibility required by the lender before you start applying for a card.
Learn as Much as Possible
This point is ignored even by the best in the business. However, learning never goes out of fashion. Talk to the customer care executives and learn about the nuances of using your credit card. Most importantly, ask questions. Whatever term you come across while researching about the card, clarify with the executive. Ask questions like, “Do you really offer 0 APR? If so, how long does the promo period last?”. You can also double-check things like, “What should be my minimum expenditure to waive off the annual fee on the card?”
If you can take care of these points, you are good to go as a beginner. Always go by the golden rule — spend as you earn.