Things to know before apply for a credit card


A credit card helps you borrow money from a bank under certain conditions. Although your monthly income plays an important role as an eligibility criterion for a credit card application, there are several factors that you should know before starting that application. Credit cards are designed to help you manage your day-to-day expenses. You should get a credit card only after knowing the various factors involved in the credit card lifecycle.

When applying for a credit card, the following factors are required for deeper consideration:

Secured vs. Unsecured Credit Card - You can get either a secured or unsecured credit card depending on your financial requirements and eligibility factors.  The line of credit issued under this type of card has a lower interest rate and is largely based on the value of the collateral. When applying for a credit card under the unsecured category, the rate of interest is usually high and no collateral is required to issue the card.

Interest-Free Period - Most credit cards offer an interest-free period that is the period from the date of the transaction to the payment due date. If you are able to make full payment of the used amount on your credit card within the interest-free period, then you are not paying anything extra to the bank. However, after the payment due date, you will have to pay the applicable interest fee which is usually quite high.

Interest Rate - One of the main reasons for banks issuing credit cards is the interest rate. Interest rates on credit cards are generally higher than most types of loans. Credit cards follow the daily compound interest rate based on the annual percentage rate (APR). Depending on the type of card, you can get it at a fixed or variable interest rate.

Minimum Payment - Depending on your credit card transaction, you will need to clear the minimum payment or the entire amount as a part of the credit card agreement.

Fees and Fees - The essential part of the credit card agreement is considered the Fees and Fees section. These are the figures that will help you determine how much you will pay to keep a card, fail to make timely payments or withdraw cash from an ATM.

Credit card selection

When choosing a credit card, the number choices you face can be overwhelming, however, your spending habits and actual need for a credit card are some of the most important factors that will guide you in making the right choice.

Banks can offer you credit card deals that are second to none, however, this is not enough as a reason for you to go ahead and pick up the card. Credit cards are a financial responsibility that should be taken seriously.