Credit cards are one of the most convenient and useful financial tools that can help you manage your money, save on expenses, earn rewards, and enjoy various benefits. However, choosing the right credit card can be confusing and overwhelming for beginners who are not familiar with the different features, benefits, fees, and eligibility criteria of various credit cards.
In this guide, we will help you understand everything you need to know about credit cards in India, from how they work to how to apply for them. We will also provide you with a list of the best credit cards for beginners in India in 2024 based on our research and analysis.
What is a Credit Card?
A credit card is a plastic card that allows you to borrow money from a bank or a financial institution up to a certain limit and pay it back later with interest. You can use your credit card to make purchases online or offline, pay bills, transfer money, book tickets, rent cars, and more. You can also use your credit card to withdraw cash from ATMs or get cash advances.
When you use your credit card, you are essentially borrowing money from the issuer (the bank or the financial institution) until your next billing cycle (usually every month). The issuer then charges you interest on the amount you borrowed until you pay it back in full or make at least the minimum payment. The interest rate varies depending on your credit score, income, spending habits, and other factors.
How Does Credit Card Work?
When you apply for a credit card online or offline, the issuer will check your eligibility based on your details such as age, income, employment status, address proof, identity proof, etc. If you are eligible, the issuer will issue you a credit card with a certain limit (the maximum amount of money that you can borrow) and an annual fee (the fee that you have to pay every year for using the card).
You can then use your credit card by swiping it at any merchant outlet that accepts it or by entering your PIN at an ATM. You have to pay back at least the minimum amount due every month by the due date (usually 30 days after receiving your statement). If you pay more than the minimum amount due or pay off your balance in full by the due date every month without any late payment charges or defaults (when you miss payments), then there is no interest charged on your purchases.
However, if you do not pay back at least the minimum amount due every month by the due date or if you miss payments frequently (more than once), then there will be interest charged on your purchases from the date of purchase till the date of payment. The interest rate is usually higher than other types of loans such as personal loans or home loans.
What are the Benefits of Using Credit Card?
Using a credit card has many benefits such as:
- Convenience: You can use your credit card anywhere anytime without carrying cash.
- Security: You can protect yourself from fraud and theft by using PINs and CVVs.
- Rewards: You can earn points or cashback on every purchase that you can redeem for various products or services.
- Benefits: You can enjoy various perks such as discounts on travel bookings, fuel surcharge waivers, lounge access, travel insurance, concierge services, and more.
- Credit Building: You can improve your credit score by using your credit card responsibly and paying off your bills on time.
What are the Fees for Using a Credit Card?
Using a credit card also has some fees such as:
- Annual Fee: This is a fixed fee that some issuers charge every year for using their services. It may vary depending on the type and features of the credit card. Some issuers may waive the annual fee if you spend above a certain threshold in a year.
- Interest Rate: This is the rate at which you have to pay interest on your purchases if you do not pay back at least the minimum amount due every month by the due date. It may vary depending on your credit score, income, spending habits, and other factors.
- Late Payment Fee: This is a fee that some issuers charge if you miss payments frequently (more than once). It may range from Rs. 50 to Rs. 200 per month depending on the issuer.
- Cash Advance Fee: This is a fee that some issuers charge if you withdraw cash from ATMs using their cards.
How to Choose the Best Credit Cards for Beginners in India 2024?
- Eligibility: You should check the eligibility criteria of the credit card that you are interested in, such as age, income, credit score, etc. You should also check the documents required for applying for the credit card, such as identity proof, address proof, income proof, etc.
- Features: You should look at the features of the credit card that you are interested in, such as reward points, cashback, discounts, benefits, etc. You should also check the validity and expiry of these features, as well as the terms and conditions for using them.
- Fees: You should look at the fees of the credit card that you are interested in, such as annual fee, interest rate, late payment fee, cash advance fee, foreign transaction fee, etc. You should also check the grace period (the number of days that you can pay your bill without any interest) and the billing cycle (the period between two consecutive statements) of the credit card.
- Customer Service: You should look at the customer service of the credit card that you are interested in, such as online access, mobile app, toll-free number, email, chat, etc. You should also check the reviews and ratings of the credit card from other users and experts.
Based on these factors, you can compare different credit cards and choose the one that best suits your needs, preferences, goals, and budget.
How to Apply for Credit Cards for Beginners in India 2024?
Applying for a credit card in India 2024 is easy and hassle-free. You can apply for a credit card online or offline depending on your convenience and preference. Here are the steps to apply for a credit card in India 2024:
- Online: You can apply for a credit card online by visiting the official website of the issuer or a third-party aggregator such as Paisabazaar, BankBazaar, etc. You can compare different credit cards and choose the one that suits you best. You can then fill out an online application form with your details, income details, and other information. You can also upload the required documents such as identity proof, address proof, income proof, etc. You can then submit your application and wait for the approval. You will receive an instant decision or a call from the issuer for verification. Once your application is approved, you will receive your credit card within a few days.
- Offline: You can apply for a credit card offline by visiting the nearest branch of the issuer or a partner outlet. You can ask for the credit card application form and fill it with your details, income details, and other information. You can also submit the required documents such as identity proof, address proof, income proof, etc. You can then submit your application and wait for the approval. You will receive a call from the issuer for verification. Once your application is approved, you will receive your credit card within a few days.
How to Use a Credit Card Responsibly in India 2024?
Using a credit card responsibly in India 2024 is very important to avoid getting into debt, paying high interest, and damaging your credit score. Here are some tips for using a credit card responsibly in India in 2024:
- Spend within your limit: You should always spend within your credit limit and avoid exceeding it. This will help you avoid paying over-limit fees and hurting your credit utilization ratio (the percentage of your credit limit that you use).
- Pay on time: You should always pay your credit card bill on time and in full by the due date. This will help you avoid paying interest, late payment fees, and hurting your credit score.
- Track your spending: You should always track your spending and monitor your credit card statement regularly. This will help you avoid any errors, frauds, or unauthorized charges on your credit card. You can also use apps or tools such as MoneyView, Walnut, etc. to track your spending and manage your budget.
- Choose the right card: You should always choose the right credit card that matches your needs, preferences, goals, and budget. You should also review your credit card periodically and switch to a better one if needed. You can use online platforms such as Paisabazaar, BankBazaar, etc. to compare different credit cards and choose the best one for you.
Conclusion
Credit cards are a powerful and convenient financial tool that can help you manage your money, save on expenses, earn rewards, and enjoy various benefits. However, you need to choose the right credit card and use it responsibly to avoid getting into debt, paying high interest, and damaging your credit score. In this guide, we have explained everything you need to know about credit cards in India, from how they work to how to apply for them. We have also provided you with a list of the best credit cards for beginners in India in 2024 based on our research and analysis. We hope this guide helps you make an informed decision and use your credit card wisely.
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