Credit Card is a tool that helps the cardholder during times when arranging for cash is tough, or he needs financial help. He can indirectly borrow for the time being through a credit card & pay back later and do credit card comparison.
It can also provide cash for the times when a person needs to clear his debts. Further, nowadays, we all know that we are moving towards a digital economy. The credit cards are more and more being used for making payments. They are considered easy to use & also provide a lot of benefits to the cardholder in the form of rewards & cash backs.
Sometimes, people are not very careful while applying for a credit card. So, they end up with problems afterward. Hence, here is a list of some important aspects that need to be kept in mind while applying for a credit card.
Consider the fees, interest rates & benefits
Whenever you purchase something online or offline, it is essential to check all the details of it, like the rates & benefits it offers. Similar is the case with credit cards. While choosing a credit card to apply for, one must do very good research on the interest rates, fees of the credit cards & the benefits that it gives. Different banks & financial institutions offer credit cards of different types to satisfy people’s needs.
First, know your needs & objectives and then select the best card that provides good interest rates & benefits on the spending.
Check your credit card eligibility
Before you can apply for a credit card, you must be aware of whether you are eligible for it or not. Different documents like income statements, credit history, credit score & other factors play a vital role in the process of approval of a credit card. So, anyone who wants to apply for a credit card should check his/her credit report before doing so.
Documents must be ready with you
Applying for credit requires many documents to be uploaded. These documents are- PAN cards, driving license, electricity bills as address proofs, etc. So, you must be ready with these documents while applying for a credit card of your choice. These documents may be required to be uploaded on the portal for application. The type of documents for income proof also vary for the salaried people & the self-employed ones in the following way-
The salaried people need salary slips of the last 3 months along with bank statements of the last 6 months. Whereas, the self-employed ones need the latest CA certified IT returns of their business along with business continuity & ownership proofs.
Comparing & then choosing
Banks offer a variety of credit cards to choose from. A potential cardholder can choose from different types of credit cards available like travel cards, lifestyle cards, movie cards, &, etc. If you want cheaper movies, go for movie cards, if you want to travel at low prices with discounts, choose a travel card and so on. Therefore, it becomes necessary always first to compare & then choose your credit cards.
Keep your credit utilization between 20-30 percent
It is recommended that the credit utilization limit must be ensured & kept between 20-30 percent. This helps to give you a good credit score. Hence, it is important to do so as it creates a good impression of you in front of your financial institution or bank. So, before applying for a credit card, make sure that your credit utilization limit is below 30 percent.
Credit cards are the best when it comes to moving towards a cashless economy. They are paving the way for this to happen. Hence, everyone must be aware of its working & the benefits one can derive from it. So, from now on, whenever you apply for a credit card, first have a look at the points stated above and then apply. This would protect you from the problems that generally a person faces after choosing an inappropriate credit card for himself.