Credit cards are a convenient tool that comes in handy for making online or offline purchases. Credit cards give you the freedom to spend money without giving it a second thought. According to the Reserve Bank of India (RBI), in April 2023, India had over 8.6 Crore credit cards.

The overall ecosystem is growing, and banks are levelling up their integration with credit cards. To attract customers, credit card providers and banks offer generous cashback, incentives and additional benefits. This article will highlight everything you need to know about credit cards, eligibility, and more.

What is a credit card?

A credit card is a type of card provided by a bank that allows the user to make purchases online & offline. When you use a credit card to make a purchase, you borrow money from the bank and repay it at the end of each month.

Credit cards are widely accepted for transactions, both in-person and online. They often include additional features such as rewards, cashback, and other benefits. Credit card users receive a monthly statement of their transactions, and they have to settle the entire balance or a minimum amount. Interest is applied to the remaining balance if not paid in full.

How to get a credit card?

You can get a credit card online through various banks. Visit the bank’s official website and choose the type of credit card that matches your interest. Getting a credit card is simple. Follow these instructions and get a credit card today!

  • Choose your credit card

Various banks offer a diverse range of credit cards to their users. When choosing a credit card, consider your spending habits, needs, and financial goals. For example, Kotak811 offers attractive reward points to its customers. You can spend in reward points and save money. Once you select the card, check with the bank’s credit card eligibility criteria.

  • Apply for the cards

Once you have chosen your preferred credit card, the next step is to apply. While applying for the card, you must submit the mandatory documents:

  • Identity proof – PAN card, Aadhaar card, Driving licence
  • Residence proof – PAN card, Passport, Aadhaar card

Some banks may require utility bills and bank statements from the last three months to assess your credibility and reliability. Certain credit cards come with an annual fee and are included in your monthly statements.

If you’re applying for a credit card online, banks may require your credit scores, income and employment details, and KYC details over the phone or via video call. KYC has become an essential tool in verifying your details during online applications.

  • Card issuance

After completing the credit card application, you will receive the credit card at your doorstep. Afterward, you will need to collect it and present your identification. Then, you are ready to use your credit card to access various rewards, cashback, and more. However, you will need to create the PIN to begin conducting transactions.

Once activated, use your credit card wisely and pay your card bills on time. You can use your credit card to bank account pay your bill online.

How much credit score is required?

A credit score is an estimate of your credit behaviour, such as the likelihood of repaying a loan on time, based on information from your credit report. Banks use credit scores to determine whether to provide you with a credit card or loan. They also decide your interest rate and credit limit.

A higher score often makes it simpler to qualify for a loan and may result in a lower interest rate or loan terms. Credit scores vary from 300 to 900. A credit score of 750 and above can help you get a credit card with a good limit.

Credit card limit

A credit card limit is the maximum amount a cardholder can spend with their card. The bank sets the limit, which differs for each user.

First-time credit card users are often granted a small initial credit limit. This is because the bank has no prior knowledge of how you handle credit. The bank may then increase the limit over time, depending on how you manage it. The bank decides on credit card limits, both credit and cash.

Factors that determine your credit card limit

  • Income
  • Age
  • Whether you have any loan liabilities
  • Repayment capacity
  • Credit history
  • Type of credit card issued

Do’s and don’ts while applying for a credit card

When applying for a credit card, thoroughly read all the terms and conditions and clarify any questions you have if anything is unclear. Do not apply for a credit card under peer pressure. Apply only if you want one, and be bold and say ‘no’ to salespeople.
Pay your credit card bills on time each month to preserve a solid credit score. Do not overspend. Use your credit cards only for the amount you can easily repay. In short, spend what you can afford.
Use your credit cards appropriately. They help you create a strong credit history, which can later help you get loans. Do not apply for multiple credit cards, particularly within a short period, as this might harm your credit score.
If you cannot pay the entire amount due to circumstances beyond your control, be sure you pay at least the minimum amount due. Do not disclose your credit card information to anybody, and watch for any fraudulent activity.

Summing up

You must use your credit card responsibly. Stay under your credit limit and always pay your payments on time. If possible, avoid withdrawing cash with your credit card. It is preferable to pay your payments in full each month rather than carrying anything forward to the following month. This will save you money on interest while also improving your credit score. Most importantly, choose a provider offering competitive interest rates, like Kotak811, to ensure great benefits and returns.