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With a new credit card, you can get more credit, higher limits and more flexible payment options. It's important to comprehend the hazards and benefits both but before applying.
Credit cards charge high interest, up to 2 to 3.5 percent per month which is 24 to 42 per cent per year. Late payments can quickly pile up. Always pay on time to avoid debt.
Try to use less than 30 per cent of your card limit. For a limit of Rs 10,00,000, do not spend over Rs 3,00,000 to maintain a good credit score.
By having many cards can seem helpful but it also create confusion. Avoid paying one card with another as it can lead to a debt cycle.
Credit cards give reward points on purchases. You can redeem them as discounts or coupons. Check expiry dates and card terms before relying on them.
Some cards let you borrow pre-approved jumbo loans quickly. Only use them for emergencies because interest will still apply.
Big purchases can be converted into EMIs, which spread payments over time. Before opting for this, always check the interest rates and processing fees.
Withdrawing cash on a credit card is costly with fees of 2 to 3 per cent and Rs 250 to Rs 500 per transaction. Only do it when absolutely necessary.
Certain cards have annual fees. While few provide a free first year and waive costs if you spend more than a certain amount. Review the charge structure everytime.
Keep in mind all fees, interest, and benefits before applying for a new credit card. Use your credit card responsibly to avoid debt and make the most of your card.