First Time Applying for a Credit Card? Then These 7 Things You Must Keep in Mind

You need to do some research before applying for a credit card for the first time. Before applying for a credit card, there are a few things you must be aware of. People think that using a credit card might result in higher expenditures and diminishes the ability to keep the balance intact. A credit card statement with a large sum then opens our eyes. Thus, you must do analysis before applying for a credit card.

1) Financial Habits: Firstly, you need to evaluate your spending habits monthly. If your salary is, say, Rs. 30,000 monthly and your expenses cross the monthly salary, that means you are lacking in saving first, and most importantly, there is a discrepancy in your credits and debits. This defines your financial habits. Now why do we need to evaluate financial habits? It explains further.

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2) A credit card is a short-term loan: Banks don’t provide free money after it credits in your account to use the money through credit cards. Of course, the bank will check the salary you have, which is income. The bank will check whether the income is consistent or not, your credit score and your identity. Thus, you need to pay back the credit amount back to the bank as the bank personnel sends you the credit card bill.

3) Self-discipline is important: A credit card is helpful if you want to pay urgent money. It has benefits too, but paying the full bill on time is also important. That’s why, before applying, you must know the discipline is important here.

4) Research: Before applying for a credit card, understand which bank is giving benefits or rewards, what the fees are and interest rate are. Because you are borrowing money for a short time through a credit card. Make sure what the terms and conditions are.

5) Understand credit utilization ratio: The credit utilization ratio is the amount of money you owe in relation to your entire credit limit. A lower ratio demonstrates good credit management and contributes to raising your credit score. Try to utilize just 30% of your available credit limit.

6) Keep track: While you have a credit card, then you must keep track of debits and credits. It will help you while paying off the credit card bill.

7) Avoid debt: Credit card balance must be returned to the bank on time.