Lifestyle

Availing Your First Credit Card? Here’s What You Must Know

While availing credit card serves you with various benefits in the form of reward points, discounts, offers etc., it is an important tool which must be used responsibly to make the most out of it. Not staying cautious and careful when using your HDFC credit card or any other issuer’s credit card sweeps you into a massive debt trap.

To assist you in moving with caution, curated here is a list of things you must know before availing of the credit card, along with a set of dos and don’ts which you must remember.

Things you must know before availing a credit card

Before you go ahead with your credit card application process, ensure you tick on the checklist regarding what you must know about credit cards –

  • Explore all kinds of credit cards: Looking at the benefits list provided to you by your credit card issuers, you might be attracted to those cards that you do not require. Hence, when determining which card you must buy, ensure to identify your financial requirements initially and then apply for the credit card that matches all your requirements, even if it provides lesser benefits than the others.
  • Make sure you have regular income: Availing a credit card might appear like attaining a massive milestone. However, you must move ahead to purchase the one just if you hold a stable income. It is crucial because not holding regular monthly or annual income might push you into situations wherein you might not be able to repay your bills on time and might eventually face debt traps. This can negatively impact your financial status.
  • Begin with spending less on your card: As you are only a beginner, you must go slow. Start with spending lower proceeds on your card so that you can ultimately understand how your credit card can work and how well your finances can be balanced with a credit card.
  • Read the terms and conditions well: As you are availing of the credit card for the first time, you should be aware of specific common terms and conditions before purchasing the credit card. Ensure to read through all the documents well and understand everything properly. In case you have any questions or queries, contact the bank directly for the answer.
  • Know about all the additional expenditures: Credit cards come with several additional expenditures. If you are unaware of such credit card charges before availing of the credit card, you may be disappointed later. Hence, ensure to go through all the expenditures that you might incur later. Your credit card might have joining fees, annual charges, or additional fees like foreign transaction charges, finance charges on delayed bill payment or cash withdrawal, cash withdrawal fees etc.
  • Ensure to maintain a good credit score: A credit card is an important financial instrument that assists you in ameliorating your credit score. Effective usage of your credit card can assist you in ameliorating your score. Try to repay your complete dues well before the due date, do not spend over 30 percent of your credit card limit until thoroughly necessary, avoid opting for cash withdrawal through credit etc. Following these measures will help you maintain a good credit score. Also, ensure to check your credit score periodically. You can conduct a free credit score check by visiting online lending markets monthly or directly visiting the credit bureaus once every year. Checking your score will allow you to detect any discrepancies or mistakes in advance and report them quickly to the concerned authorities for correction. A rectified report can instantly enhance your credit score.

Check out the credit card dos and don’ts:

Dos Don’ts
Effective usage of a credit card can ameliorate your credit score Improper usage can negatively impact your credit score
Keep your credit card info with yourself Losing your card or card details might result in fraudulent transactions and misuse.
Use a credit card to mitigate financial exigency. Credit cards provide borrowed money, which you must repay by the due date. So, avoid overspending. Spend just as per your repayment capacity.
Purchase the credit card of your requirement and use it well to earn cash backs, reward points and discounts Keep a thorough check on all your credit card offers, like discounts and rewards. Do not avoid them as you may miss out on huge savings.
Pay your credit card bill in full on time. Avoid paying your credit card bill late as it will not just incur a late payment fee but also heavy finance charges.

Important FAQs (frequently asked questions)

Is it safe for you to avail a credit card?

Yes, it is completely safe to avail of a credit card. All the credit cards come with 4 digits secured identification number that is utilized to authenticate the credit card owner. A card’s PIN is just like a signature used for verifying identity and assisting you in protecting you against any fraud.

When should you avail your first credit card?

You can avail your credit card as soon as you begin earning. Generally, credit card companies have a minimum eligible age for credit cards of 18 years.

Why is it necessary to avail of a credit card?

It is crucial to avail of a credit card to avail of the benefits offered by the card. For example, credit cards assist you in meeting any urgent or major financial expenditures at the convenience of no cost EMI facility or regular EMI facility. Additionally, with the effective use of credit cards, you can earn cash back, discounts, and rewards points.

Are debit cards and credit cards the same?

No, credit cards are not the same as debit cards. When you buy using your credit card, the money is debited from your available credit card limit, which the issuer offered you. On the contrary, when you buy using your debit card, your money is debited from your savings bank balance. To use a credit card, you do not require having money before making the purchase, which is not possible in the case of debit cards.

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