5 things to know before applying for a credit card

5 things to know before applying for a credit card

The time of cash-based transactions is fast receding. Credit cards and digital modes of payment are becoming the norm. Cashless transactions are gaining all the more prominence in a contact-free post-pandemic environment. Credit cards are one of the best options when in need of some instant money. Here is what you must know before you apply for a credit card.

Annual Percentage Rates

This is the interest rate that you are liable to pay from month to month on the balances that you hold. Rohit Garg, Co-founder and CEO, SmartCoin says, “One should note that such cards often carry penalty APRs, which are enforced in case of late payment. It can range from 15 per cent on the holding balance to as high as 42 per cent, depending on the bank.”


Your credit card might offer a loyalty point, cashback, or some other kind of discount or other exciting offers. In order to deliver competitive rates to their clients, credit card issuers often partner with airlines, supermarkets, petrol stations, and different businesses and service providers to attract customers.

Add-On card

By opting for an add-on card, you can expand the perks of your credit card to your dependents and immediate family members. Garg, of SmartCoin, says, “Keep in mind, an extra card is nothing but a credit card expansion that you are liable for paying alongside your primary payment.”

Your credit history

Credit card issuers report to organisations such as credit bureaus or credit rating agencies about your monthly credit card use. For each person with a credit card, loan, or other forms of credit-based account, these bureaus maintain a corresponding credit history. Certain credit card mistakes — like late payments and high balances — will turn up on your credit report and brings down your credit score. This makes it difficult to attain more credit cards or loans in the future.

Comparing credit cards

If you are looking to apply for a credit card, experts say, evaluating different choices is one of the best things to do. When you compare the cards you are eligible for, you will be able to determine a card that suits your requirements. Additionally, third-party websites can help you compare a range of credit card forms issued by a few of India’s leading banks.

Credit cards are powerful tools if used correctly. Garg, of SmartCoin, says, “Treat credit cards like a sharp knife or a chainsaw. They’re powerful tools, but if you don’t use them well, they have the capacity to inflict more damage than good.”

Source:- financialexpress