Credit Card Application: An Essential Guide for Beginners

The world of credit cards can be confusing for people who have never used one. However, credit cards have become a staple financial tool that helps you with emergency financial purchases and needs when you don’t have instant cash.

Besides financial assistance, credit card come with lucrative rewards and benefits. Make sure you understand every aspect of credit cards before you apply for one and start using them.

Important Elements of Credit Cards

Before you apply for a credit card, there are a few terms that you must be aware of:

Credit Limit

The credit limit is the maximum amount that you can use on your credit limit. The credit limit is sanctioned based on your repayment history, credit rating, income capacity, and other factors.

Billing Cycle

Normally, credit cards come with a 35-50 interest-free period, which means if you make purchases at the beginning of your billing cycle, you have time till the payment due date to pay off your debt to avoid any interest charges on the usage.

For example, your billing cycle is from the 20th to the 20th of next month. If you purchase an AC on the 21st of August, and your next payment due date is 30th September, you don’t have to pay any interest on the amount if you pay it in full before the payment due date.

Credit Card Payments

You have the option to pay in full, pay partially, or pay the minimum amount. Not paying at all, or making late payments, can take a toll on your credit rating. Paying in full is the best option, which doesn’t attract extra charges. 

Maintaining a Credit Score

Creditworthiness is a substantial criterion that credit card apps look into. You must keep an eye on your score and apply only when the score is high to enjoy a good credit limit, a low rate of interest, and other credit card benefits. To apply for credit cards, you must have a decent credit score (650-700 plus), a good repayment history, stable employment, and a good flow of income. Use one when you are confident about repaying your dues on time.

Staying Within the CUR

Credit Utilisation Ratio or CUR is the percentage of the credit limit you must use on your credit card. The recommended CUR is below 30%, and going beyond it can lead to a dip in your credit score. So, if your credit limit is Rs 1 lakh, try and maintain your usage within Rs 30K-40K.

Cash Withdrawals

Cash withdrawals are permitted up to a specific percentage of your credit limit on credit cards. However, treat this as a last resort, as no interest-free period is granted on cash withdrawals, and it attracts a high-interest charge.

How to Apply for a Credit Card?

Follow these steps to apply for instant credit cards:

Step 1 – Download and install the best credit card app on your smartphone and fill out the application form

Step 2 – Provide required details, and submit your KYC documents

Step 3 – Wait for instant approval, and enjoy using the credit card.  

Conclusion

There is no standard definition of the best credit card! It all depends on your financial needs, your payment capacity, and the way you manage debt. Trust only the best credit card app and apply for one based on your demands and spending habits.