Most people who apply for a credit card for the first time assume that this financial product is just another way to buy things. In reality, the credit card delivers much more.
Credit cards help increase credit scores, establish credit history, and earn rewards, cash refunds and rebates. It also gives the user a financial discipline.
However, as a novice user, you must know the important benefits of using a credit card before applying. Some of the most important are the following.
Improve your credit score
Your card plays a key role in building your credit history. The reasonable use of cards and the return of the amount over time will make your Credit score increase. This would enhance your possibility of getting a loan or card with a higher limit.
Safe and secure way to pay
Most credit cards offer protection and security that guarantee the security of your account. Credit card companies will prosecute scammers for the unauthorized use of your credit account.
You can also be in a situation where you want to return to the product after buying it. The cause may be a defective product or poor service. A credit card allows an easy reversal.
Earn reward points while spending
You can choose your card according to your spending habits. For example, your choice may depend on whether you spend more on groceries or clothing or fuel. You will now receive loyalty points and cash refunds according to the selected card.
Select the correct card with these tips
There are some things that should be taken into account when applying for a credit card for the first time.
Know the difference between a secured card and a normal card
Secured credit cards are granted based on fixed deposits. In this way, the lender can seize the fixed deposit in the absence of payment. On the other hand, you do not need security to use the services if you choose unsecured credit cards.
Consider your spending plan
As mentioned above, choose your credit card according to your lifestyle. Choose a card that provides travel rewards if you travel a lot due to work or choose a card that offers discounts on clothing or groceries if you buy more of these items.
Know your credit limit
Based on the assessment of creditworthiness and credit history, the issuer of the card establishes a credit limit that can be availed of. You should avoid using a full credit limit every month because this may affect your CIBIL score.
Cards with special features
- Some credit cards, offer features such as emergency loans and protection against fraud or easy availability of cash at ATMs.
- If you do not have one, apply for a credit card with benefits such as easy financing of EMI products, loyalty points, refunds, minimum processing fees and more.