Applying for a credit card? Ask yourself these 6 questions first
In the fast-growing world of e-commerce, we all know the convenience credit cards bring. It makes us all wish to own the best credit cardavailable. But in the excitement, we miss out on some important points which we must take care of when we apply for a credit card. What are the most necessary things to keep in mind when applying for a credit card? There are some basics you need to pay attention to. These will help you in making an intelligent choice.
Is there a link between your credit history and your credit card?
Yes. Your credit history is past performance as a borrower. Even if you have been an authorized user of somebody else’s card, good repayment records will shape a healthy credit history. Your credit history has a direct effect on how much interest you will be charged on your credit card. A credit score above 700 is considered to be a good one.
Why do I even need a credit card?
This is where most people miss out when they apply for a credit card. It is of prime importance that you assess your need for a credit card. Once you are sure of the need, you’ll need to decide the type of credit card you want. The clearer you know its use, the more efficiently you’ll be able to manage it. Before getting a credit card, ask yourself questions like:
- Do you need it for the attractive discounts offered on online shopping?
- Do you need a credit card that works well with fuel needs?
- Do you need it for travel purposes?
- Do you need it for financial stability?
These are some evaluations you need to make when you apply for a credit card. Because it can either be a godsend financial support or a hellish monetary burden, computing your needs will always put you in a better position to know the type of card you want.
There are a variety of credit cards available like a secured credit card, travel credit card, shopping credit card, fuel credit card, etc.
What is the cost that will come with a credit card?
The card usually comes with an annual fee which the user is required to pay. Apart from this, missing out on the due date of payment results in interests and penalties like late payment fees. Cash advance fee, balance transfer fee, over-the-limit fee are some other examples. When you apply for a credit card, it is important to familiarize yourself with the fee a card charges and how you can dodge it.
What are the perks offered by the credit card you are choosing?
The best credit card gives you the best returns. With offers, discounts, cashback, and rewards, a good credit card saves you a lot of money in the long run. Some credit cards also offer attractive insurance policies, medical assistance, accidental damage coverage and other emergency reliefs. Therefore, it is essential to know the benefits that come with the credit card you choose. Analyze the additional offers and make a comparative study before finalizing the card you choose to go with.
The main factor: What is the limit on your card?
Your credit limit is determined based on your credit score. If the card you choose doesn’t have the credit limit you need, it won’t suit your purpose. Also, you need to have a credit limit in your mind. Knowing the limit will also enable you to use your card diligently and build a healthy credit history. Usually, the credit card limit increases with a good credit score, allowing you to make bigger purchases and avail better offers. The best ways to increase your limit include:
- Paying your dues before the due date (this works like magic on your credit score too).
- Increasing your credit score (the closer it is to 900, the better).
- Maintaining the credit utilization ratio (ideally, it is suggested to keep it below 30%).
The security: What if there’s card fraud?
While credit cards are safer than debit cards, there are chances of mishaps everywhere. The protection offered by a card should be one factor determining your choice. Every credit card has a different fraud protection policy, and you must decide on the merits of each card’s security. The best credit card should also be the safest and the most secure to use.
Having answered these questions, you’ll be able to choose a credit card tailored to suit your needs comfortably. The best credit card will make a difference when you have these six points in your mind. Efficient usage succeeds as an intelligent choice, and if you make a good choice, managing a credit card should be a cakewalk.
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