Detailed process to own a credit card

A credit card is the best alternative and efficient method to process financial transactions online or offline in place of cash handling. Debit cards are also the close competitors of the credit cards for alternative methods of transactions but we will discuss credit cards only in this blog. We earlier discussed both types of cards which can be also termed as plastic money as well.

Why to have Credit Card:

Having a credit card has its own advantage and disadvantage and it is purely upon you which methods you adopt for your day to day financial transactions. We will limit the scope of this blog to credit card utilization only and need why you should have credit cards:

Detailed process of Credit Card
  1. The efficient usage of Credit cards helps you in improving your credit score, and further this improved credit score also beneficial in availing loans and other financial instruments.
  2. Efficient and cashless online and offline financial transactions.
  3. Lucrative Offers on joining the credit card family.
  4. Having a credit card will make you eligible to purchase in a big amount at once and you can pay the amount later in easy EMI options (but with applicable interest rates included).
  5. You will have around 45 days window to pay your credit card bill that also without interest which means you can manage your finances easily in those 45 days of the window period.

Benefits of Credit Card:

The credit card has a long list of its advantage and disadvantage and it should not be termed as a disadvantage because it is purely the mismanagement of individuals. I have discussed the pros and cons of credit cards in my other blog on plastic money. So here I will just list down the major advantages you can enjoy being a credit cardholder.

Insurance coverage:

some credit card offers you pre-existing insurance coverage like an accidental cover and other just because you are a member of their card family.


Credit card companies offer lucrative rewards to their customer on joining like joining offers followed by continuous rewards in terms of cashback, reward points throughout the usage cycle of the card. In addition, free movie tickets, supplementary discounts while making online transactions, and interest-free EMI are also offered by the companies to the customers.

Complimentary Lounge Access:

Selected credit cards offer complimentary lounge access at domestic and international airports to their customers. So if you are using airports frequently then can have access to those facilities at the airport by joining the club.

Use as a Debit Card:

A credit card can also be used as a debit card to draw cash from an ATM machine. But it is strongly suggested, not to attempt this except in extreme emergencies. Because of the company levy heavy surcharges in the bill for the cash withdrawal which can sometimes reach up to 36% as well.

Fuel Surcharge waiver:

A credit card is a bit useful in saving your pocket when you are parking your vehicle for refueling at the fuel station. Maximum credit cards offer saving in terms of waiving the surcharge levied by companies for refueling. But the company can put a limit of a certain amount of spending on refueling for achieving these discounts.

Ways how to apply for credit card:

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 online or offline.

Offline 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 cards offered by the institution and can select the best one based on your requirements. If you meet all the requirements and eligibility criteria for credit card application then the card will be dispatched to your address within 15 days usually. That means:

  1. Visit the bank branch
  2. Ask about the credit card section
  3. Select the card based on your need
  4. Fill the form for the same
  5. Attach the required documents in asked manner
  6. Provide address and income proofs as well
  7. 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.

Online 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:

  1. Click on the website of the institution offering credit cards
  2. Fill up basic details like mobile number and email id
  3. Select the best credit card for you
  4. Bank representative will call you in a short time and let you know the whole process
  5. A representative will visit in person to you and you can ask in details about each card to select the best for you
  6. Handover all the documents like for 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 for having a credit card:

Every credit card is different in features and facilities providing to the customer and accordingly, eligibility for the cards is different. But there is some basic prerequisite which you must meet to get a credit card 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 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 usually restricted up to 90% of the FD amount.

Documents required to apply for a Credit card:

There is a need for 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 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

Payments of bill:

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 bill generated, generally communicated to the customer by message/email and registered post to the registered address. You can the bill by any of the convenient methods out of net banking/ UPI/ mobile applications or by visiting the bank branch.

Generally company asks you to pay the bill in two format:

  • Either  you should pay the full bill
  • Or if you don’t have finance in hand at present can pay the minimum amount due.
Trap of 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 against credit card. Here is the condition like a trap for the customer by the companies which generally costs heavily on the customer pocket and the customer did not even notice that. And how is that, let’s see with an example:

Suppose you have an outstanding bill of 1000 rs and you have two options with you, whether pay the full amount of 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 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 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 of the minimum amount due. Please keep these things in mind while planning to go for credit card and definitely it will help you save to your pocket.