What is a Credit Card and how to use them right?

Obtaining a credit card has numerous benefits when used in a prudent manner. Online credit cards simplify making purchases, and some even reward you for your spending. Furthermore, a credit card can be an effective instrument for establishing a good credit history. If you’re looking for your first credit card, you should know how they function and how to make the most of them.

Eligibility & Documents Required for Credit Cards

Credit Card Eligibility

1. Age – You must be at least 18 years old to participate. Some banks, on the other hand, impose a minimum age requirement of 21 years. The maximum age limit varies as well, however it usually ranges from 50 to 60 years old.
2. Salary per year – If you’re eligible for a certain card, it’s based on your annual income. In India, a minimum annual salary of Rs.3 Lakh is necessary to apply for a credit card. However, it’s essential to double-check this criterion with your bank because it varies depending on which card issuer you choose.
3. Nationality – Citizens, residents, and non-residents all have the opportunity to apply. There are, however, a few cards available specifically to Indian citizens.

Before applying for a card, it is critical that you review the credit card eligibility requirements. To improve your chances of approval, make sure to check off each condition on the checklist.

Credit Cards Documents Required

The documentation you’ll need to submit with your application will vary depending on the bank you’re applying to. However, the following is a list of some of the most important documents required for Credit Cards:

1. Application form filled out completely
2. 2 Photographs
3. Identification proof
4. Proof of address
5. Salary slips from the most recent pay period
6. Bank statements

How to use a Credit Card?

Credit cards are quite convenient to use. If you go into a store, for example, you may be asked to swipe your card or insert it into a chip reader. You can also use contactless payments in stores by adding your card to digital wallet apps. Using your online credit card when shopping is as simple as inputting your card information, which includes:

1. Your credit card number
2. The date of expiration
3. The CVV security code, which is usually displayed on the back of your card

When you make a purchase with your card, the merchant, the credit card company, and the card network work together to authorise and complete the transaction. All of this is carried out electronically and in real-time. It’s also crucial to use your online credit card in ways that will help you improve your credit score while not costing you too much in interest and fees.

• Make On-Time Payments

Credit ratings are determined by a number of elements, the most essential of which is your payment history. Paying your bills on time will improve your credit score, however, paying late or missing payments can have a significant negative impact. The first piece of advice for using a credit card is to make sure you pay your bills on or before the due date each month.

• Understand how the interest on your credit card is calculated

If you carry a balance from month to month, interest charges can make everything you buy with your card more expensive. When you apply for an online credit card, make sure you know what the APR is and how interest is calculated on transactions.

• Keep a watch on your balance

Your credit usage ratio is the second most important element that impacts your credit score after your payment history. It determines how much of your available credit you are currently using. In general, it’s preferable to keep your credit card balance low in comparison to your credit limit. Maxing up your credit cards might lower your credit score and send a message to lenders that you’re a high-risk borrower.

Wrapping Up

Credit cards can help you develop a good credit score, but if you use them incorrectly, they can also work against you. When comparing cards, make sure you know how much interest and fees you have to pay, as well as what rewards and benefits you will get. Check your free credit reports on a regular basis once you start using a credit card to ensure that your account activity is being reported appropriately.