Banking & FinanceFinanceInFocus

Factors to Consider Before Applying for a Credit Card

100% online and paperless application process and several excellent credit card options available today, it is easy to get overwhelmed by the sheer amount of choices. If you’re thinking of getting your first credit card, here are some factors you should consider before making a decision.

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 Credit cards are an efficient tool to manage your finances in the current cashless economy. Not only are they a way to take charge of your debts, but they are also a great source to get an emergency fund that you can carry everywhere with you. Having a credit card reflects positively on your creditworthiness, and you also get to avail numerous benefits at various places.

 However, with 100% online and paperless application process and several excellent credit card options available today, it is easy to get overwhelmed by the sheer amount of choices. If you’re thinking of getting your first credit card, here are some factors you should consider before making a decision:

Your Spending Patterns

 Analysing your spending habits is the first and foremost critical factor. Whether you intend to use your credit card for emergencies or everyday expenses will influence the types and terms of cards you choose. Pick a card with a lower interest rate if you plan to carry your credit outstanding for more than a month.

Application Processes and Terms of Card Issuance

 Applying for a credit card is simple as most banks offer a 100% online and paperless application process. However, the necessities differ from issuer to issuer. Check for all the document requirements beforehand so that the application doesn’t get delayed. It is also savvy to ensure the fees and other conditions are as per your convenience. For instance, you can opt for a credit card that offers zero joiningfees and no annual charges.

Interest Rate and Credit Limit

 With any form of credit, you will have to pay the interest along with the principal amount borrowed. Examine the interest rates being offered by your issuer and compare them to your affordability.

Check the credit limit on the card as well, as payment freedom is the primary reason you’ll want to get a credit card in the first place. Selecting a card with a lower limit will take you to max out your credit limit, and that reflects negatively on your creditworthiness. Opt for a card or issuer that meets your financial  requirements seamlessly and make the most of your credit card.

Perks and Incentives

Today, credit cards are more than just a convenient financial tool. Most credit cards come with premium perks that can help you save significantly on every transaction. These include payment offers, discounts on selected merchants, as well as reward points on travel, dining, shopping, and more. You can redeem these reward points to unlock exciting benefits on your spending. So, do look for these benefits while choosing the right credit card.

The Grace Period and Repayment Terms

Though it is wise to pay your card’s dues monthly, it is better to check in advance if your card offers a grace period. You must also check for fines and penalties in the event of delayed payments. Paying your card dues post grace period will impact your credit score negatively. Hence, measure all the circumstances beforehand before finalising.

Conclusion

 With credit comes the responsibility of repayment and managing your finances more efficiently. It is better to understand the terms and conditions in advance instead of getting bothered by your credit concerns in the future. Do a proper credit card comparsion and make a rational decision for selection a credit card that best suits to your requirements

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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