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Afraid about how to apply Credit Card – a Detailed guide to learn the secrets before applying

Using plastic money instead of hard cash is a good step and a credit card is another way to use Plastic money. A credit card is issued by the financial institution with the pre-approved limit, which means customers can borrow money from the institution. A maximum ceiling of borrowing is pre-approved. This limit is based on the customer’s credit score and transaction history. The difference between Debit Card and a credit card is that while you swipe a debit card money is deducted from your savings account but if you swipe a credit card that money gets deducted from the pre-approved limit

How to apply Credit Card

A credit card is issued by the financial institution with the pre-approved limit, which means customers can borrow money from the institution. A maximum ceiling of borrowing is pre-approved. This limit is based on the customer’s credit score and transaction history. Now a day’s credit card companies offer the cards conveniently to the customers depending on their convenience. Every company offers its customers to join their card and you can apply for a credit card online or offline

apply credit card online and offline
how to apply for credit card

How to apply for Credit Card Offline

Applying for a credit card in offline mode means you have to visit the bank desk and inquire about the credit card as per your requirements. Every bank has nominated representatives to handle the credit card applications that will attend to you. You can enquire about each and every type of credit card offered by the institution and can select the best one based on your requirements. If you meet all the requirements and eligibility criteria for a credit card application then the card will be dispatched to your address within 15 days usually. That means:

Process to apply Credit Card Offline

  • Visit the bank branch
  • Ask about the credit card section
  • Select the card based on your need
  • Fill the form for the same
  • Attach the required documents in an asked manner
  • Provide the address and income proofs as well
  • Attach your two passport photos on the application form

That’s all and if found eligible by the company, a card will be dispatched and the same will be communicated to you on your registered mobile number

how to apply credit card

How to apply for Credit Card Online

Applying for a credit card in online mode means you as a customer don’t have to go anywhere and can select the best credit card for your need among the wide array of cards available on the website of the banks. Once selected you should click and apply for the particular card then and there through the website. A representative from the bank will approach you once found eligible based on your documents and credit scores. That means:

Process to apply Credit Card Online

  • Click on the website of the institution offering credit cards
  • Fill up basic details like mobile number and email id
  • Select the best credit card for you
  • The Bank representative will call you in a short time and let you know the whole process
  • A representative will visit in person to you and you can ask in detail about each card to select the best for you
  • Handover all the documents like KYC, income and address proof to the representative along with two passport photo

If found eligible by the company, the card will be sent to your address and the same will be communicated to you.

Eligibility criteria to apply for a credit card

Every credit card is different in features and facilities providing to the customer and accordingly, eligibility to apply is different. But there is some basic prerequisite which you must meet to get an approval and those are:

  • You must have an age of 18 years or more
  • You must have a good credit score of more than 700
  • If you have any outstanding loan then it will hamper your credit score badly if not paying premiums in timely
  • You should be employed somewhere or must be drawing salary on a regular basis
  • You can be self-employed but must have a regular source of income and the same must be reflecting in your income proof
  • Either you can have a fixed deposit against which you will be issued a credit card. But in this case, the limit for cards is usually restricted up to 90% of the FD amount
  • Documents required to apply for a Credit card
  • There is a need for the submission of various documents to the institution while applying for a credit card. Documents need to submit for the proof of
  • Identity proof or KYC: Documents for KYC may be Voter Card, Aadhar Card, Passport, Driving License, Pension Book, Bank statement, etc
  • Address proof: may be out of Passport, Driving License, Voter Card, Electricity Bill, Rent agreement if residing in a rented house, Telephone bill, etc
  • Income proof: like salary statement, Bank statement, PAN card, Income tax return or Form 16, etc
  • Two passport size photographs
  • Original signature as in the bank accounts

How to pay Bill of Credit Card

Now as we discussed the process of how to apply for a credit card, the next thing we must know is how to pay bills. As already discussed that we have 45 days window or grace period to pay the generated bill against the usage of a credit card. Once the bill is generated, generally communicated to the customer by message/email and registered post to the registered address. You can bill by any of the convenient methods out of net banking/ UPI/ mobile applications or by visiting the bank branch.

What is Minimum Amount Due in Credit Card Bill

Generally, the company asks you to pay the bill in two formats: Either you should pay the full bill Or if you don’t have finance in hand at present can pay the minimum amount due. It is highly recommended that if possible, please the full amount and don’t default on the payment. If you missed one payment by the due date, it will adversely impact your credit score thereby making loan borrowing difficult in the future at competitive terms.

The second and most important is that never ever go for paying the minimum amount due. I will discuss this trap of minimum amount due with the help of an example. Suppose you have an outstanding bill of 1000 rs and you have two options with you, whether pay the full amount of the bill that is Rs 1000 or you can go for the minimum amount due. Now, the minimum amount due is equal to 20 (generally 2% of the outstanding dues) and you paid the minimum amount due. Now the company will not deduct these 20 Rs from the principle 1000 Rs but first, it will levy financial charges on the outstanding amount which generally equals 1.5% of the outstanding amount.

So here the finance charge will be equal to 15 Rs and the company will first deduct this 15 Rs from the minimum amount due. So ultimately the amount credited into the company account by you is not 20 Rs but only 5 Rs (20-15). So the amount unpaid against your next month’s bill will be 995 Rs. And if you keep on paying only minimum amount dues, it will take around 25 to 30 years to completely clear your dues for that card provided you did not make any purchase against it in the future.

So, you can see how vicious this cycle is and you will not even realize the importance of it and you paid around 2500 to the company as a financial charge only. Also, you lost the cost of opportunity associated with those 1000 Rs, if you would have invested somewhere in the long term market. If invested, that 1000 would have grown to approximately 30,000 after 30 years

So now I hope you can understand, why it is necessary to pay the complete bill and not the minimum amount due. Please keep these things in mind while planning to go for a credit card and definitely it will help you save to your pocket

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