5 Things You Must Know Before Getting A Credit Card

Getting a credit card is exciting and rewarding in the current world of plastic money. When used correctly, credit cards can help you increase your spending capacity, improve your credit score, build your credit history and revolutionize how you pay your bills. Credit cards not only help avoid cash usage and help you tide over short-term financial crunch if used wisely. Adding to the benefits, credit cards also come with offers and all the added benefits, such as reward points or partner deals.

As a first-time credit card holder, you may have certain apprehensions about how to get a credit card and other related queries. With a little bit of awareness about some of the top things to keep in mind, you can make a smart decision about your first credit card. Here are the five things you must know before getting a credit card.

Types of Credit Cards

As a first-time credit card applicant, one must note that many different types of credit cards are available in the market. Each credit card comes with different applications and unique eligibility requirements. Before you get a credit card, an applicant must take the time to research and compare different credit card options available and choose a credit card that suits them best. Consider important factors such as interest rates, reward programs, annual fees and additional benefits that come with the credit card. Reading various customer reviews and seeking recommendations can help you in credit card comparison.

Check Your Credit Score

Once you select a credit card, to begin with, you need to check your credit score as it determines your eligibility for owning one. Lenders use your credit score to determine your creditworthiness and determine the terms and conditions of your credit card, including the interest rates, credit limit and rewards. Before applying for a credit card, it is important to check your credit score. If your credit score is low, you can pay your bills promptly to improve your credit score in the long run and secure better rewards.

Understand the Interest Rates and Charges

Before applying for a credit card, it is prudent to check if any interest rates or other charges are levied on your credit card. Although owning a credit card is extremely convenient, they often come with different fees, including annual fees, late payment penalties, transaction fees, interest charges etc. When applying for a credit card online, make sure you check the terms and conditions carefully and ensure that any additional charges, such as annual fees, late payment fees or penalty charges, are associated with the credit card. Additionally, check with the bank if interest-free credit cards are offered and if you lie in the eligibility criteria to avail of one.

Practicing Responsible Usage is the Key

It is important to keep a check on how much you are spending, irrespective of your card’s credit limit. The overall credit utilization ratio also affects your credit score; hence a higher credit utilization ratio cannot be considered good even if your payment history is decent. Before applying for a credit card, get yourself aware of your financial discipline and ensure that you have a steady income to repay the credit amount. Only charge what you can afford to repay in a timely manner to ensure a good credit score. Paying your credit card bill in full each month can help you build a positive credit history and avoid high-interest charges.

Protect Your Card from Fraud and Identity Theft

As the world has become more plastic money driven, chances of fake credit cards, fraud and identity theft have become significant issues. While looking for credit card companies, be vigilant about the security of your card by opting for one which comes with robust security features. Go for credit cards which come with features like two-factor authentication to protect your card from fraud. As a good practice, always monitor your account for any suspicious activity or unauthorized transactions and report them immediately. Staying informed and taking proactive steps can help you protect your credit card information and keep fraud and identity theft at bay.

Credit cards are hands down one of the most convenient ways that open you up to a world of spending choices and additional benefits. Hence, before applying for a suitable credit card, consider the above-mentioned steps to get the best deals on credit cards and maintain your credit score in the long run.