Five Things You Must Know Before Getting Your First Credit Card
For every hundred Indians, there are only three credit card users in India, whereas the data for Americans shows that for every hundred people, thirty-two cards are used. This was the data from the Reserve Bank of India in 2019. By now, the situation in the United States would have changed, and more credit cards will have been issued. In India, however, growth in first credit card applications is slower. Nonetheless, India is catching up due to the concerted work of the Reserve Bank of India, a body that has compelled banks to cut annual credit card fees and interest rates, in an effort to make Indians use credit cards more. The “Digital India” that the government has envisaged for India’s economic development is taking shape, albeit gradually, as Indians are still used to cash transactions, and paying utility bills through conventional means like cheques.
Surges in credit card use
In 2020, India’s economy took a hit, and that was a predictable outcome of the pandemic. Although credit card use was down in April, it was up by June/July. The value of transactions through cards came near to pre-COVID levels at Rs. 1,15,877 crore. This was a jump of more than 100%. Cash withdrawals via ATMs kept up the digital rise by Rs. 1 lakh crore in 2 months. More people had begun transacting, showing that consumer spending had picked up considerably, and using cards was a boon. The value of prepaid payment instruments also rose from Rs. 9,648 crores in April, to Rs. 14,494 crores in June/July. There was also a growth spurt in credit card use at POS terminals in merchant outlets. With more Indians, even in smaller cities meeting credit card eligibility, the use of such cards is bound to grow.
First credit cards
Credit cards are a convenient and easy way to pay if used rationally and responsibly. The push for transparency in transactions is a major impetus for encouraging credit card use in India by the Reserve Bank of India. Getting your first credit card is not as daunting as it may seem. Here are five things to know before you consider getting your first card.
- Be sure you have credit card eligibility, and you are of age (mostly 21 years in India) to apply for a credit card. You will likely need proof of age, residence, identity, etc., which can be furnished with an Aadhaar card, PAN Card, driver’s license, or passport among others. Check what documents are required by enquiring with the bank or credit card company you want. You may need to have a bank account with a regular in-flow of funds.
- Don’t apply to every bank that advertises credit cards. As card inquiry is reflected in CIBIL, this can adversely affect your borrowing needs in the future. Stick to a few banks that are known to have reputable transaction histories.
- Premium cards are not for beginners. Granted, these come with huge cash limits and flashy rewards, but if you’re just starting out, you’ll likely not be eligible. These are offered to people with excellent credit scores and high-income groups who meet particular income requisites. Besides this, they come with higher annual fees.
- Check rates/fees, such as cash advance fees (when you use the credit card at ATMs), interest rates when taking a loan, and fees charged in case you cannot pay the whole amount on your credit card bill.
- Credit cards may have high cash limits, but see that you end up spending only 30% of that limit. This is a good rule of thumb for first-time users, just to make sure you can pay your credit card amount when you are billed. The more regular you are with payments, the faster you can build a good credit score.
If you want to avail a good first card option, the Bajaj Finserv RBL Bank SuperCard is apt for you. Apply online and avail up to 3 months of loans, as well as interest rates as low as 1.16% per month. You can pay for products in EMIs, as well as earn rewards, get ATM facilities, and receive 5% cashback on your first down payment.