6 questions to ask before getting your first credit card
Credit cards are a very useful and convenient financial tool that is gaining popularity with every passing day. There are many factors which we should keep in mind while apply for credit card. Here are a few questions that every consumer must ask before getting their first credit card and why:
How to pick the right credit card?
Consumers willing to get a new credit card must ask themselves and pinpoint what exactly is it that they spend most on. It could be travel, fuel purchase, shopping or anything else. Whatever their expenditure is focused on, there is a credit card that has been specially designed to cater to those preferences so that they can earn rewards and benefits while spending. Therefore, individuals must research and pick the credit card that provides the most benefits and rewards as per their preferences.
How much joining fee/ annual charges will be charged?
All credit cards do not require a joining fee and annual charges. If there is a joining fee followed by annual charges, the consumers should enquire and assure that these charges come along with relevant rewards and benefits. Consumers must examine the market and research the various cards being offered with and without fees before choosing a credit card.
What will the new cardholder’s credit card limit be?
The credit limit is the maximum amount of funds that the cardholder is allowed to spend defined by the bank on the basis of their credit score. So it is safe to assume that the cardholders who spend more and repay the spent expenses in time are most likely to get a raise in their credit limit. Cardholders should act responsibly and not spend beyond their credit limit. Otherwise, they will be charged for their excessive spending.
What will the new cardholder’s cash advance limit be?
A cash advance is a feature that helps cardholders during cash emergencies allowing them to withdraw money from ATM machines using their credit cards. The limit up to which this withdrawal can be made is decided by the bank and is lower than the credit limit. Cardholders should not overuse this facility and should keep it as a last option as the interest rates and fees charged on such cash advances are pretty high.
What happens when one has only paid the minimum amount due?
Total outstanding amount on the card should be paid before the given due date to avoid paying unnecessary interest charges. If for some reason the cardholder is only paying the minimum amount, then interest will be charged on the whole amount of money utilized by them. This means cardholders should be aware and repay the outstanding amounts within the interest-free credit span if they wish to avoid unnecessary costs.
What is the significance of a good CIBIL/Credit score?
A credit score is a direct indicator of their creditworthiness that is given by the Credit Information Bureau Limited. Credit score ranges from 300 to 900 and is assessed on the basis of the cardholder’s track record with any credit dealings. The higher the CIBIL score gets, the more creditworthy they become.
To conclude, we can now be sure to say that It is essential to choose the right credit card that befits your needs and preferences. Otherwise, they might end up losing or missing out on a lot of rewards and benefits. Consumers must opt for a card that is best suitable for them after careful evaluation of the different types of cards being offered by different banking institutions instead of impulsively picking a random card.