9 Things to Keep in Mind before Getting a New Credit Card



For many of us, a credit card is a key to financial freedom. It is the “Khulja Sim Sim” magic code to purchase anything we want. It is this tiny piece of plastic that dictates how much we spend, when do we spend and what we spend on. Personal loan applicants who come to Loan Singh end up getting their request rejected due to a poor credit score. Most of them have their repayment history strewn with instances of maxed-out credit limit and statement not cleared on time. New credit card users are less immune to the nuances of using a credit card effectively. We, therefore, thought of laying down some pointers which you can keep in mind while applying for a new credit card.


Credit Card Basics

A credit card is a rectangular piece of plastic that identifies your financial credit account. It contains a magnetic strip on the back. The front houses an RFID chip along with your name, card number and card validity. Some basics of credit card also include

  • A credit card allows you to spend money taken on credit from the bank or card issuing company.
  • The purchases you make via credit card are done within a billing cycle which is usually 30 days.
  • A monthly statement details your transactions for the most recent billing cycle.
  • If you have an outstanding balance, you will have to make a minimum payment towards the balance
  • After the 30 days, there is a grace period for payment of the credit amount due. If you pay the credit balance in full, within the due-date, you don’t accrue any interest. But, if you pay less than the entire credit amount, within the due-date, you accrue interest on your average daily balance.


9 Things to Keep in Mind before Getting a New Credit Card

Now some of the things we want to mention are self-explanatory. A digital lending platform, such as Loan Singh, accesses your credit records to determine your creditworthiness for personal loan approval. Be smart in using your credit card and prevent your credit score going negative.

Be prompt with your bill payments and avoid overspending past the credit limit.

The target for a new credit card user has to be prudence in bill clearance and maintaining a good credit score. Let’s look at 9 things that you can keep in mind when applying or starting to use a new credit card.

Get a Credit Card Based on Your Lifestyle

You are the best person to know your spending habits. You might be someone who adores flying, someone who dines in expensive restaurants or simply unwinds in long drives. Credit cards give you extra points or rewards against specific services. A fuel credit card comes with savings on fuel top-ups and helps you gain extra points which can be redeemed later. A frequent flyer can redeem points to earn free miles or discounts on car rentals and hotel bookings. Specific credit cards help you get discounted prices at your favorite restaurant.

Apply for a credit card with the lowest charges

When scouting for the right credit card, consider the parameter of charges on the credit card. Some charges that should be considered are interest charges, annual charges and penalty fees. The interest is levied when you default in your credit card payment or when you pay only some of it. Some card issuers may waive-off the processing fees. But, your annual fees will be waived only when there is activity on your credit card.

Don’t Max-Out on Your Credit Limit

When you receive your new credit card from a bank or credit card issuing authority, the credit card comes with a certain credit limit depending on your repayment capability. Over the course of usage, looking at your discipline in prompt bill payment or due to an increase in your income, banks may tempt you to enhance your credit limit. A higher credit limit will allow you to spend more, but it is important to continue to be disciplined and also avoid debt. It is better if you do not increase the credit limit for at least the first year of credit card usage so that you get used to the payment schedule. Increase the credit limit only when your income increases.

Always Make Payments in Full

Your credit card bill will mention the amount you need to pay towards transactions done during the billing cycle, due-date of bill payment and the minimum amount payable. The concept of minimum balance allows you to pay some of the total amount and continue with the credit card usage. But, it also means an added interest charged on the balance that is due. So make sure you pay the entire bill amount to avoid bearing the interest charge.

Keep an eye on your budget

Now that you have a new credit card you might be tempted to go on a shopping spree. Remember that reckless spending could lead to serious damage to your financial planning. Credit card holders end up spending more than they actually can afford simply because of the delayed impact on their bank balance. Make use of a monthly planner or schedule to manage your expenses.

Stay away from multiple credit cards

Although it may seem like a cool idea to own a holder full of credit cards, they may be hazardous if not used sparingly. Haphazard handling will lead to default upon default and, finally, too much to contain. Then you will have to anyway curb your spending or close some cards to get your financials back on track.

Security of your card

Never disclose your Credit card advance PIN number and your CVV (Card Verification Value) number to anyone. If you share, then it’s a sure way to getting your card misused and bank account cleaned-out. Also, ensure that you shop online on a secure website

Consider credit card add-ons carefully

Supplementary credit cards are add-ons that are issued over your primary credit card. It is issued to family members such as spouse, parents and children. The onus on making payments towards the supplementary card falls on the primary card holder which will obviously add to your credit card bill statement. You will be the one liable for late payment charges and the interest on outstanding amounts. Try to avoid supplementary cards, if you can.

Avoid Cash Advances on Credit Cards

Cash advances mean withdrawing cash from the ATM. The moment you withdraw the cash, the interest is levied on your credit card. It is, therefore, advised to use it only as an emergency option. For larger amounts, you can always avail a personal loan from Loan Singh.


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