Getting your first credit card is an exciting thing. Your mind may be filled with visions of unlimited shopping, movies, traveling, and dining out with your loved ones. Chances are that you don’t want any of these things but just want to build up a good credit score in order to get loans at better interest rates or quicker than before.
Whatever be your reason to apply for a credit card, here are some things that are good to know beforehand so that you can get the maximum value out of your card:
1. Check for Interest Rate
Beware that interest rates may be higher for a first-time credit card user. While every bank provides an interest-free period, that could range anywhere from 30 days to 50 days, to pay your outstanding amount, there are times when life throws a wrench in your plans and you are not able to pay your dues in full before the interest-free period is up. If you are not very confident that you will be able to pay off your dues on time, then it is best to shop for a card that charges the lowest interest rate. Make sure you pay the minimum amount due on time in order to keep up a good credit score at least.
2. Find Annual Fees
There are credit cards that come with zero annual fees and those that come with thousands of rupees worth of annual fees. Some cards don’t charge annual fees only for the first year while there are other cards that offer a lifetime of no annual fees. It is best to weigh the pros and cons of cards with and without an annual fee. It is possible that cards that charge a high annual fee also offer other rewards that make the fee worth it at the end of the day. This would depend on your lifestyle requirements as well. So it is best to do a thorough research of the cards in the market and then make your choice.
3. Compare Rewards Points
Banks offer rewards on using credit cards. These rewards can be points that can be accumulated to be exchanged later for products or services or it could be as cashback. Rewards can be given on various categories ranging from groceries to movie tickets, dining to airline tickets, or retail spends to hotel bookings. All cards do not offer the same kind of rewards for the same categories. That’s why it is important to choose a card that offers rewards that are most closely aligned to your spending patterns. For example, if you are a foodie who likes to cook and eat at home more than eat out, then a card that offers more rewards for grocery shopping would earn you reward points faster than one that offers you rewards for dining out.
4. Look for Credit limit and Cash Limit
Your credit limit might not be very high for a first-time card, but it can be increased after a year of usage and if you have been diligently paying off your dues.
5 Miscellaneous Fees
Credit cards charge a whole lot of other fees, such as late payment fees, foreign transaction fees, cash advance fees, balance transfer fees, etc. Knowing all this beforehand will save you from any unwanted shocks later on.
A credit card can be your best friend if you know what you want, spend wisely, and pay back your dues on time. Not only does it help you build up a good credit score, it also helps you to enjoy life or meet any emergency expenses without stealing your peace of mind.
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