If you want to have a credit card in future and are in the process of applying for the same, then you must go through this article. A credit card is such a beautiful market tool by which you can improve your credit history and can build up your credit score. If you are not aware of credit or CIBIL scores then you must visit my other dedicated blog over CIBIL and you will get all the related information like the importance of CIBIL for your finances there in that blog.
Why Credit Card?
The credit card provides you with the freedom to meet your expenses in times when you don’t have enough cash available in your account. Additionally, you will be rewarded by the banks for using them and you can maximise further reduce your expenses by utilizing those rewards timely. But one important thing is that you must pay your credit card bills in time or else you will be facing heavy penalties for delaying the payments. Many of us must have been using credit cards but there are some facts that we must know.
Don’t worry if you are not meeting the eligibility criteria
Banks do not provide a credit card to every customer applying, and before processing their request every bank checks for the fulfilment of some basic criteria. Basic criteria include the source of income for example you are a salaried person or engaged with any business and you must have your credit score above the basic limit. If you do not qualify for all the basic eligibility criteria then banks have all rights to deny you a credit card.
However, if you do not meet all the eligibility criteria, you can request your bank to issue the Secured Credit Card. A secured card will be issued against the deposit made by you with the banks. Banks, generally, issue a credit card with a credit limit of up to 90% of the FD value, under terms and conditions. But, if you failed to pay the bills timely, your bank has a right to deduct the same from your deposits.
Paying with the EMI option
Nowadays credit card is widely used for online shopping as companies offer lucrative offers for online purchasing. Generally, people purchase costly items online because of one distinctive feature of credit cards and that is paying the sum into monthly instalments i.e EMI. Purchases made through credit card can be paid back in easy monthly instalments and the amount will be added to your monthly bill of the card. Nowadays companies came up with the more refined feature of No Cost EMI on credit cards which is one step ahead of the ongoing instalment system.
Here are some important points you must keep in mind you should not delay your payment of bills at any cost, as it will lead to severe penalties. Also, the overall spending through all the purchases on cards should be kept under 30% of your credit limit. Spending above this limit will surely affect your credit score and can disturb your personal finance. You can check your credit or CIBIL score by visiting the official website of CIBIL.
Sometimes you should ignore freebies
Things that we get for free are not useful sometimes, and the same goes for the case of credit cards as well. We try to find and apply for a credit card having very minimal or zero rental and joining fees. But we must understand one thing that the credit card offered by the banks without any fees have very minimal or no other facilities attached to them. While cards with annual fees come with some lucrative facilities like lounge access, extra reward points and many more. So if you think that your lifestyle is such that you are frequently using these facilities, you must go for premium credit cards.
Pre Approved loan can be your saviour
If you are facing an acute financial emergency and are not able to borrow money from anywhere else, your credit card can come to your rescue. Sometimes bank offers you a pre-approved loan that you are not even aware of and you can verify it from your bank and utilise it. But you must know that these types of loans associated with cards are unsecured loans and usually carry high-interest charges. Their interest rates can range from 12% to 30% on average.
You will be charged the EMI of this loan with your credit card bill. You must check whether you will be left with a sufficient credit limit on your credit card after this loan or not as you have to meet your other expenses. Since this is a pre-approved loan, so it will be disbursed to your account very quickly and you can use it when you have no other option of borrowing left with you.
You can not claim an increase in Credit Limit
A credit card is usually issued with a credit limit and you can not spend more than that limit in any case. The ceiling of this credit limit is decided by the banks based on your financial discipline and behaviour. Banks will fetch all information regarding your financial transactions like if any late or default payments and many other things. Once a bank approved a credit limit, it is the bank that has the sole right to increase this limit. You can not claim for an increase in this credit limit. But yes, if you have a good reputation and transactional behaviour with the bank with respect to credit cards, you can request an increase in the credit limit. But, whether the credit limit will be increased or not totally depends on the bank and you can not influence it in any way.