Under certain conditions, a credit card helps you borrow money from a bank. While your monthly income plays a vital role as the eligibility criteria for the credit card application, before initiating that application, there are various factors that you should know. Credit cards are designed to assist you in managing your daily spending.
Consider the following points when you apply for credit cards online or offline:
Types of Credit Card
There are various types of credit cards in India. One should know about all the types and then decide to buy one. For example, you can opt for a beginner level credit card with a low annual fee if you are new to credit cards.
Your Income
To check your repayment capacity, the credit card issuers can request your income details. When you apply for a credit card online or offline, your income plays an important role. This is evidence to the lender that you can pay your credit card bill. Obviously, with the rise in your income bracket, the card options increase.
- Important Credit Card Terms And Conditions
As they contain details that you agree to while using the card, it is necessary to know all the terms and conditions. Learn about the card’s APR selection, the relevant costs, how rewards work, and all the other important information. Remember to read the terms and conditions carefully before applying.
Grace Period
A grace period is when the lender does not charge any interest if you pay off the new balance in full and before the due date of payment on the transactions made. The grace period starts from the end of the billing cycle to the next due date for payment. If you miss out on the grace period by not paying the balance in full before the due date, interest on the outstanding balance will be levied.
Fees And Charges Related To The Card
Make sure you check all the essential card-related fees. Joining fees, annual fees, financing charges, payment fees, cash advance fees, international transaction fees, over-limit fees etc. are among the things you need to keep a check on. Not doing so can get you burdened with unforeseen costs, make sure you know all these numbers well.
Penalty On Late Payment
You need to know about the charge you will incur to pay off the balance later than the alleged payment’s due date. You will not only incur additional costs if you pay late, but the creditors will report your late payment to the credit bureaus, which can affect your credit rating and lower your credit score in turn.
Balancing Your Credit Utilization Ratio
Regardless of your credit cap, it is essential to keep a balance on how much you spend. The credit utilization ratio also affects your general credit health, so even though your repayment history is excellent, a higher utilization ratio may not be considered healthy. If you use more than 30-40% of your card’s capacity, your credit score will be decreased, and in terms of repaying your card balances, you will become a greater risk.
Understand How Credit Cards Can Affect Your Credit Score
Your credit score is affected by the credit card as it defines your financial decisions and debt management. Credit cards can negatively affect your credit score if you overcharge your credit card by spending beyond the given credit limit.
Credit cards provide convenience and versatility. Before applying for a credit card, make sure you think about why you need the card, what you’re going to do with it, and whether the benefits outweigh the costs. You can apply for credit cards online at financial institutions like Axis Bank. They offer an easy and streamlined application process.
