In 2019, India crossed 52 million credit card users. Although it looks like a huge number, the reality is that only 3 in 100 people own a credit card. When used responsibly, credit cards can really give people a spectrum of services that range from handling financial emergencies to going spontaneous shopping. So if you’re a newbie trying to understand what you need to know before you get a credit card, this is the perfect place. Here are some criteria that you need to be conscious of before you apply for a credit card.
Credit Limit
This refers to the amount of money that a particular user is entitled to borrow in a single billing period. The credit limit is fixed by the card provider and depends on factors like the customer’s earnings, credit score, and so on. First-time customers are often given a low credit limit but that is usually revised once they put up a good credit profile. Basic things one needs to do to maintain a good credit profile are to repay their credit card dues in time and maintain a good balance between their debts and incomes.
Grace Period and Interest
The customers are provided with a specific amount of time by the card provider to pay off their debt. During this time, no interest is charged on the borrowed money. However, should the customer fail to clear the payment, the sum is carried forward and interest is applied to it. These rates depend on various factors and vary between different providers and naturally the lowest interest rate credit card is the most lucrative option for any user.
Other fees and Conditions
There are often multiple other clauses that one must know about. Most cards require payment the first time a card is issued and then the annual fee for keeping the card. There is also a rewards system for the transactions made through the card that helps save money for the customers. Different companies offer different rewards for various transactions - as a result, it is a key factor to choose the right card based on what transactions it is to be used for in order to save optimum money.
Types of credit cards: What suits you the best?
With these requirements in place, it is time to look for cards that provide the best services. As mentioned earlier different customers use the card for different types of services hence there are multiple credit card types based on the fields in which they are bound to save the most amount of money. The major credit card types and the leading contenders in the field include cashback, travel, and secured credit cards. There are various other categories to choose from like dining, hopping, online transactions, and so on depending on the customer’s requirements. A simple credit card comparison will be enough to tell you the one that’s right for you.
Eligibility criteria
Other than the terms suiting the customer the only major factor to be considered is to choose a card whose eligibility conditions are met by the user. Most cards have an age limit and income bracket that the user must satisfy in order to apply. As a result, one is not sure whether their application will be approved when applying for a credit card. This is where the instant approval cards come in handy as they provide the user with some indication regarding the fate of their request within a few minutes of applying. This is done mostly by checking the eligibility of the applicant for the particular card and then his or her credit score is assessed to give an indication of how the application may fare with the bank or the company issuing the card.
All cards have a specific age bracket to which the applicant must belong. The lower limit is 18 or 21. The other factor considered is the earning capacity of the applicant as that determines the amount of credit they would be able to pay back. Often securities like fixed deposits of the applicant are also considered as qualifiers for the card.
Credit Score
A credit score is of the utmost importance when it comes to approval of credit cards. An applicant's credit score is a measure of their track record and the higher the score the better. It is usually recommended to have a credit score higher than 700 or 750 in order to get approved. There are a number of factors that can help the credit score. This includes measures like paying off the debts in time, spending only 35-40% of the allotted credit, and so on in order to appear as a customer who is sincere in paying off the money owed to the bank.
The Bajaj Finserv RBL Bank SuperCard is a card packed with features that can help you during times of emergencies and financial crises. Unlike standard credit cards, the SuperCard does not levy interest for up to 50 days when you use it to withdraw money from an ATM, while it also comes with features like welcome rewards, making it one of the best credit cards available today.