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First-time credit card users face the risk of falling into a debt trap due to overspending and failure to clear dues within the deadline.
First-timers should choose a basic card, spend wisely and pay dues on time. (Representative Image)
Getting your first credit card is a significant financial milestone. When used responsibly, a credit card can help you build a strong credit history, earn rewards and manage expenses with convenience. However, for beginners, it’s easy to feel daunted by the eligibility criteria, unfamiliar terms and the risk of accumulating debt.
First-time credit card users face the risk of falling into a debt trap due to overspending and failure to clear dues within the deadline.
Here are a few simple steps to secure your first credit card and use it sensibly to set the foundation for a healthy financial future.
How To Get Approval For Your First Credit Card
Check Your Eligibility
Before you apply for your first credit card, make sure you meet the basic requirements set by the card issuer. Generally, you should be at least 18 years old and have a steady source of income, whether you are salaried or self-employed. Most banks and card issuers take the credit score and income of the applicant into account while approving a credit card. Understanding these requirements beforehand will increase your chances of approval.
Start with a Beginner-Friendly Card
If you’re new to this credit facility, it’s wise to begin with a credit card designed for first-timers. Look for credit cards with no joining and annual fees. Consider secured credit cards, which require a fixed deposit as security, or student credit cards if you are still in college. It’s easier to get approval for such cards. Securing a basic credit card, with a lower credit limit, can also help you build your credit score.
Apply Through Your Bank
Applying through a bank where you already have a savings or salary account can improve your chances of getting approval for a credit card. Many banks offer pre-approved credit cards to existing customers based on their account history and profile. This can make the process quicker and smoother.
Prepare the Necessary Documents
When you’re ready to apply, keep your documents ready to avoid delays. Typically, you’ll need your PAN card, address proof (such as Aadhaar or a utility bill) and proof of income (like a salary slip or recent bank statement).
How To Use Your Credit Card Responsibly
Always Pay Your Bill In Full
One of the most important habits is to clear your entire bill each month, not just the minimum amount due. This helps you avoid high-interest charges and strengthens your credit score over time. Missing the credit card bill deadlines will attract late fees and interest charges on the entire outstanding balance while impacting your credit score.
Keep Credit Utilisation Low
Generally, financial advisors suggest keeping your utilisation ratio under 30 percent of the credit limit. For example, if your card limit is Rs 20,000, aim to spend not more than Rs 6,000 to Rs 7,000 monthly. A low credit utilisation ratio signals to lenders that you manage money wisely, which boosts your creditworthiness.
Set Up Auto-Payments and Reminders
Missing a payment can negatively affect your credit score. To avoid this, enable auto-debit from your bank account or set up calendar reminders so that you never miss a due date.
Make the Most of Rewards
Use your card for essential purchases like groceries, mobile bills, fuel, or dining and take advantage of cashback offers, reward points and discounts. This way, you benefit from your regular spending without the temptation to overspend.
Avoid Cash Withdrawals
Using your credit card at ATMs should be completely avoided. Cash advances attract immediate interest charges and additional fees. Unlike shopping and other credit card payments, there is no interest-free period for cash withdrawals. It’s best to avoid using your card for cash withdrawals altogether.
First-time users often make mistakes that can harm their credit score and finances. Avoid applying for too many cards at once, as this can raise red flags with lenders. Always read the fine print carefully so you’re aware of fees, interest rates and penalties. Don’t overspend just to rack up reward points and never lend your card to someone else, many card issuers may find it a violation of the terms and conditions.
A credit card, when used with care, can be a powerful tool for building a healthy credit profile and unlocking better financial opportunities in the future. For first-timers, the key is to start with a simple card, spend within your means, and always pay on time.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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Delhi, India, India
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