Looking to apply credit card online for yourself? Are you confuse which credit card best suited for you? However, you must know some bizarre truth behind a credit card before you apply.
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As a credit card holders, you can easily pay a merchant for availing any products or services on credit. However, you need to pay back the full amount or minimum amount before the due date to the card issuer. Furthermore, you will be charged an interest on your outstanding balance.
You can apply credit card online also to any banks depending upon your requirements. Banks set a credit limit based on your income and spending habits. Normally a card provides you different rewards and offers that allows you to avail lots of benefits.
Suppose your job demands you to travel vigourously, then a travel credit card is the best option for you. It lets you enjoy your trip without worrying much about your expenses. Furthermore, you can use it very easily and its pay-back options are also hassled free.
However, a credit card can also make you feel sick if you are unable to pay-back on time. So, use it wisely and spend depending upon your income. It is a goldmine for you if used properly and becomes a debt trap once you started ignoring pay-back.
If you are a newbie, here are some bizarre facts you must know before you apply credit card online in 2018.
Know Categories of Cards Before You Apply Credit Card Online
You will find different categories of credit cards that suit your lifestyle and spending habits. This is the first step while choosing and applying for a credit card online.
Co-Branded Credit Card
A Co-branded credit card allows you to avail dual benefits via one single card. It is actually a card in association with a retail brand and a bank. You can enjoy immense benefits like discounts and offers from a retail partner brand.
A Retail partner could be retail chain stores, ticket booking, travel partner, and many more. You can enjoy your shopping while spending and at the same time reap the benefits by using a co-branded credit card.
Cashback Credit Card
Cashback credit cards offer you cashback on your spending. You can earn cashback on bill payments, travel bookings on flights and hotels, dining bills, and many more.
Reward Points Credit Card
Reward points credit card lets you get multiple rewards on each of your card transaction. You can earn points on offline and online card transaction. Moreover, you can earn points in the form of welcome gifts, birthday gift, renewal bonus, and much more.
You can then redeem all the rewards point for any products or services mentioned in the retail merchant catalogue. It may include cashback offers, travel offers, and others.
Balance Transfer Credit Card
Balance Transfer Credit Card allows you to transfer a balance from one card to another card. In fact, it really doesn’t matter whether both the cards belong to the same or different issuer.
However, banks charge you a nominal processing fee for balance transfers.
Business Credit Card
If you travel a lot for your ventures, then a business credit card is just for you. Normally corporate credit cards are being offered by banks to business establishments for their employees.
However, you cannot use a business credit card for your personal transactions and are valid until you employed with the company. You are entitled to get offers on a hotel stay, travel expenses, airport lounge access, and other benefits.
Benefits of Credit Cards
You can easily use a credit card to get awesome benefits and offers. It lets you worry-free transaction with a credit card and pay later.
Credit cards allow you to avail EMI facility if you are planning to purchase costly items. Eventually, it will balance your monthly budget without denting your account balance. Instead of taking a personal loan, paying EMI through credit card is much cheaper for an expensive purchase.
Moreover, credit cards let you avail interest-free short-term credit for a period of 45-60 days. In this grace period, you will not charge anything. However, you need to pay back before the due date to avoid huge penalty. So, you can benefit from a short-term loan without paying a single penny.
Apart from other benefits, credit card also gives you great incentives and offers. From cash back to collecting rewards point that you can always redeem as you want.
Drawbacks of Credit Card
A Credit card lets you purchase instantly and pay later without paying any interest. However, if you fail to pay then it will have adverse consequences.
Your credit card issuer may ask you to pay back monthly minimum amount and carry on your purchases. But let me tell you one thing, paying just the minimum amount will drag you into a debt trap. In fact, you may think that as your credit card bill is low, so let start shopping more. However, you are actually accruing more interest day by day and your outstanding total remain as it.
So, instead of paying the minimum amount, pay off your full monthly balance amount before your grace period comes to an end.
Beware of hidden costs that will add up to your credit card statement. This credit card hidden charges include fees and taxes like late payment penalty charges, joining, processing and renewal fees, and other miscellaneous costs.
Your credit limit also gets reduced if you fail to pay back before the due date along with late payment charges. So, that would have a negative impact on your credit score.
Credit card issuer imposes a high-interest rate on borrowing and the average rate is around 3% per month. So, in a year you will be paying approximately 36% along with other charges. Of course, you will have the grace period where you will not charge anything. Make sure you pay in full before billing due date to avoid paying charges.
Beware of credit card fraud and look for any suspicious transaction carefully in your statements. If you found anything dubious then inform card issuer immediately. Normally charges are waived off if the fraud is proven.
Checklist to use before and after you apply credit card online
Before you apply credit card online, read carefully terms and conditions of usage and all the charges that impose in the card.
Try to put the brake on your shopping and avoid overspending than you can pay back. Make sure you’re aware of how much your expenses.
If you purchase an expensive product, then opt for EMI paying mode. It let you avoid paying high-interest charges on your card outstanding amount.
Don’t overspend and keep minimum 40-50% of your credit limit in case of an emergency. So plan your expenses and transact according to your plan.
Always pay back full outstanding balance amount instead of paying the minimum amount. It lets you avoid high-interest charges and other hidden costs. Most importantly, never ever miss the billing due date. So, make a habit of paying the full amount one or two days before due date.
Close Credit Card and Exit
Before you close your credit card make sure you pay all outstanding dues. It may include some charges that may appear after the billing cycle.
Once you pay all the charges, just fill the credit card closure form. Your card will be canceled only after the card issuer verifies that all dues have been cleared. You will get a closure notification when all the formalities of closing your credit card are over.
You can use the above tips to avoid the pitfalls of credit card debt so you can enjoy a stress-free life. So, before you apply credit card online, make sure you know the benefits and drawbacks of a credit card.
I hope this post will help you to take a decision before you start using a credit card.
What are the problems you are facing while using a credit card? You can share your experience with us in the comment section.
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Published on: June 28, 2018