Are You Ready For It? Things To Keep In Mind Before You Apply For A Credit Card

Are You Ready For It? Things To Keep In Mind Before You Apply For A Credit Card

At 23, I have finally started to discuss finances with my friends. And not in a random passing, we have serious discussions about mutual funds and credit cards. However, owning a credit card has always been a murky topic for me. What if I can't manage my payment? Or worse, I make a silly decision and get scammed! There are certainly a lot of pros and cons to this decision. 

My internal monologue got me thinking, what are the key points I need to filter through before I make the commitment of my first credit card? The prospect of it seems exciting because it comes with the security of digital money. It would help me make investments which require a lump sum of money like buying furniture, an electrical equipment, or a new phone. 

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On the other hand, most of the credit card owners I spoke to were guilty of lack of self-control. They confessed to often overspending, not paying the full amount by the end of the month and suffering from high-interest rates. 

So if like me, you cannot make up your mind about a credit card, here are a few things to remember before you make your decision. 

1. Get a credit card only if you can pay the bill in full on time. Because the interest rates levied on dues are extremely high in most cases. Geena Bharwani, a banker, adds that most people do not keep in mind the added cost of interest on unpaid dues. Since the rates aren't mentioned forthrightly when you get a credit card, it is best to research before signing up. 

2. Keep in mind the extra costs that come with a free credit card. From joining fees, renewal fees, processing fees to late payment fees, there is a list of extra expenses you will have to pay, aside from the money you owe to the bank. 

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3. Find a card to meet your preferences. If you're a frequent flier, traveller or an avid shopper, finding a credit card with an added membership or benefits helps you save more. 

4. Do not accept offers over the phone without prior knowledge. Since credit cards a huge step into adulthood, you need to be fully aware of what you are signing up for. Make sure to read the offer document beforehand, keep in mind the interest rate, credit limit, and due dates. 

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5. If you have the option, always pick a debit card. "Money is material, credit isn't. Using a debit card is 100% probability that you have the money. When you use a credit card, your purchase is based on the assumption of an average-best case scenario that you can pay off the bill. The probability of paying your credit card is always less than a 100%," said Suryansh Dhingra, a financial analyst. 

Hope we helped you come to a decision regarding this!

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