Buying credit card for the first time

April 13, 2023
DD Planet

We’re living in a digital world and thus, a credit card becomes a sort of necessity, for unlike UPI, it gives us a credit period and we may pay back the amount spent on a later date.

At the same time, credit cards may become a costly affair, especially if we don’t pay back on time since the penalty as well as the interest a credit card provider charges would increase the cost.

Here are a few tips to help you get the best out of this plastic money, i.e. a credit card:

1. The first thing is acceptance. The credit card you choose should be accepted by all the sellers you normally interact with. You may opt for a VISA or Mastercard, though in India VISA cards offer more benefits.
2. The second point is the credit period. This is the duration in days during which you can opt to pay back the amount spent without paying any interest. Since the credit period is what gives us the flexibility and the most important aspect of a credit card, we need to choose a card that provides us the maximum credit period, for example, if the cut-off date of a credit card is 25th of the month and the due date is 7th of the next month, then you get a maximum buffer of 43 days (credit period) if you make a purchase on 26th of that month.
3. The next important thing is the annual fee and joining fee. Many of the financial institutions these days are providing life-time free credit cards if you have some relationship with them. Therefore, choose a card that has no annual fee and joining fee. In a few cases, if the associated rewards are structured in such a way that they outweigh a small annual fee, we may ignore this component. Similarly, if a credit card provider is charging just a small joining fee without any annual fee in future and the associated benefits are huge, we may ignore the joining fee.
4. Ensure that the credit card seller follows all the security norms during transactions and provides you with verification whenever a high value transaction takes place.
5. Do not fall in the trap of benefits and rewards. Only a credit card that provides you the right benefits and right rewards is useful. For example, free club entry or business lounge access at airports may not be a benefit if you don’t visit such places.
6. Read all the offers thoroughly and make sure there is no hidden cost.
7. The next thing is the interest rate charged by the card seller. This is an important aspect if you have the habit of converting a credit card balance into EMI and making it a loan offer. Choose the one that has the lowest interest.
8. Look for the late payment fee. It has to be minimum.
9. Do not buy a credit card just for the sake of it. Too many credit cards are of no use. Keep this in mind when you’re going for your third or fourth card and so on.
10. Do not opt for a card just because your friend is buying it. The best card for you is the one that matches your lifestyle.
11. Make sure the statement by the card provider is given to you on time and it provides you with all the payment options.
12. Choose a credit limit that you require. The maximum is not always the best. Better if you can keep one card with a lesser cap and the other with a higher cap in terms of credit amount.
13. Withdrawing cash using a credit card should be your last choice. But if you’re into this habit, you should choose a card that provides you with an optimum cash withdrawal limit.