Tips on getting your first Credit Card in India 2024
The usage of credit cards in India is increasing year after year. Lots of fin-techs have also come up with their cool credit cards attracting lots of customers by their heavy advertisement budgets and offers on online platforms. This, along with many other factors, creates a FOMO in individuals who have never owned a credit card.
In this blog post, we will discuss about benefits of having a credit card and how to get your first credit card.
Table of Contents
Why Should You Get a Credit Card?
While managing cashflow and delaying expenses is one of the major benefit and driving factor for getting a credit card, there’s much more you can get from credit cards. Here are some benefits of credit cards:
- Build Credit History: It helps in building credit history which in future can help you for bigger loans like home loan,
- Convenience: There are many services which only accept credit cards. Netflix, Youtube subscriptions are perfect example for this.
- EMI: You can convert your purchases to EMI via your card.
- Rewards and Benefits: Many credit cards offer rewards, cashback, instant discounts, and other perks on various spending categories.
- Emergency Fund: A credit card can act as a financial cushion during emergencies.
Types of Credit Cards
When choosing your first credit card, consider the type that best suits your financial needs and lifestyle. Here are a few types commonly available in India:
- Secured Credit Cards: These are backed by a fixed deposit and are ideal for those with no credit history.
- Student Credit Cards: Specifically designed for students, these cards often come with lower credit limits.
- Entry-Level Credit Cards: These are basic credit cards with no or low annual fees, ideal for first-time users.
- Rewards Credit Cards: If you plan to use your credit card frequently, a rewards card can help you earn reward points (RPs) on your spends.
- Cashback Credit Card: These cards offer cashback on your transactions excluding some categories depending on card
- Travel Credit Card: These cards are focused on airmiles and loyalty points
Choosing the First Credit Card
- Annual Fees: Some cards come with no annual fees, making them a cost-effective choice for beginners.
- Interest Rates: Understanding the interest rate or APR (Annual Percentage Rate) is important as it determines how much you’ll pay on outstanding balances.
- Rewards and Benefits: Look for cards that offer rewards or cashback on categories where you frequently spend.
- Credit Limit: A lower credit limit might be preferable initially to avoid overspending.
- Approval: Opt for cards with easy approval processes, especially if you have no credit history.
Applying for your First Credit Card
Applying for your first credit card in India is straightforward, but you’ll need to ensure you have the following:
- Eligibility: Most banks require you to be at least 18 years old and have a stable income source.
- Documents: Typically, you’ll need identity proof (like Aadhar or PAN card), address proof, and income proof (salary slip or IT returns).
- Credit Score: While a credit score is important for credit card approval, some cards are designed for those with no prior credit history. (FD backed cards)
Note: It is advised to apply for your first credit card where you already have a banking relationship as this ensures faster approval.
Tips on Managing your First Credit Card
Once you’ve got your first credit card, managing it responsibly is the key to maintain a good credit score and avoiding debt traps:
- On time payment: Timely payment of your credit card bill is crucial to avoid late fees and interest charges.
- Keep Utilization Low: Try to keep your credit utilization (the amount you spend compared to your credit limit) below 30%.
- Monitor Your Statements: Regularly review your credit card statements to ensure there are no unauthorized charges.
- Avoid Minimum Payments: Always aim to pay your full statement balance to avoid high-interest charges.
FAQs
What is the best age to get your first credit card?
You are eligible to get a credit card at the age of 18, however, you should inly get credit card when you have a steady income.
Can I get a credit card with no credit history?
Yes, you can get a secured credit card or a student credit card, both of which are targeted for individuals with no prior credit history.
How do I increase my credit limit?
Regular, timely payments and maintaining a good credit score can lead to automatic credit limit increases. Alternatively, you can request an increase from your bank.
What happens if I miss a payment?
Missing a payment can lead to late fees, increased interest rates, and a negative impact on your credit score.
Can I have multiple credit cards as a beginner?
It’s goot to initially start with one credit card and manage it well before you apply for other card. However, there is no strict rule that you can’t have multiple credit cards as a beginner.
Makes a lot of sense, but still most of the cards that I want to get as a beginner are not available for me!
You would most probably need to start with a basic card from your Salary account. We don’t really have a choice when we apply fir first credit card.