All You Need to Know About Credit Card,Beginner’s Guide

What should you look for in your first credit card?

credit card
credit card

The credit card marks the beginning of your credit journey. Most young adults would like to be part of the professional and mature crowd. So when a bank offers them a credit card for the first time, it can be a very exciting feeling for them. However, it is important to understand that the right time to get your first credit card is not when you are offered one, but when you think you are ready to afford to pay EMIs as a liability additional financial contribution.

Getting your first credit card is like moving to a new apartment. It starts with great enthusiasm and gives you the feeling of feeling independent, but a few weeks later, when you realize that you have to take care of everything yourself, from the laundry to the kitchen, the very idea of ​​living alone seems disappointing. Similarly, a credit card is not about buying new things, but about paying bills on time and keeping a close eye on credit usage.

Your first credit card is to give a boost to your credit profile. It is likely to offer basic benefits and rewards. So, let us talk about what really matters with your first credit card.

  • Easy Approval Process

At the time of getting your first credit card, your credit would be new and your income limited. Banks would not be interested in offering you a card containing many benefits, so it is best not to ask for such a card in the first place. Choose something more fundamental, something for which you think you can be approved. A secured credit card can also be a good alternative for new users. These cards are secured against fixed deposits. Another way to increase your chances of approval is to contact a bank with whom you have an existing relationship. For example, if you have a payroll account at HDFC Bank, you have a good chance of being approved for a HDFC credit card.

  • Low annual fee

Your first credit card should be easy on your pocket. There are several no annual fee credit cards with great features for novice users. Some banks offer credit cards for a nominal annual fee, which are reversed when the card usage limit is reached. For your first credit card, you must choose a card with low or zero annual fees as a cost-effective way to build a good credit score.

  • Useful rewards program

Although, for the first time, you do not have many options to choose from, it is important to make the right choice among the available alternatives. For example, a sign up bonus may be beneficial for a beginner, but if you are under pressure to spend a certain amount to get this bonus, it may not be as exciting. In addition, some cards offer additional rewards for specific expenses, such as online use or grocery shopping. Among the options available to you, choose the one that offers you useful rewards.

Best Practices Related to Your First Credit Card

Practices Related to credit card
Practices Related to credit card


Getting a credit card does not mean you can do everything. You only have to spend what you trust to manage. When buying something with your credit card, it can be difficult for a novice user to assess its impact on finances in the coming months, when EMI will be due. Even a simple non-payment by credit card can lead to the chain of missed payments and a pile of debts. To avoid such circumstances, we have listed some practices that you must adhere to:

Less use, more benefits –


The credit utilization rate is an important part of your credit score. On your first credit card, banks will offer a low credit limit. You must try to stay below the usage mark of 30%. Use the card to buy items you really need and can not afford to pay in a lump sum. Do not splurge.

Full Payment –

Although the bank allows you to pay a minimum amount if you can not afford to pay the total amount due on your credit card, this is not considered a good practice. When you do not pay the full payment, the balance of the balance generates heavy daily financial charges and the new transactions you make are not eligible for the interest free period.

Pay on time –

The timing of paying your credit card bills also has an impact on your finances. If you do not pay on time, the bank will charge a late payment penalty as well as the financing fee for the number of days the balance is outstanding on your account. Therefore, you must pay the total amount remaining by the due date.

Check your credit report –

Once you start using a credit card, your credit profile will be created. Nowadays, a number of third-party websites offer a free credit rating and a credit report. Subscribe to one of these services and watch the transactions closely. In case of discrepancy, you must contact the credit bureau and resolve the problem immediately.

Go beyond the first credit card

Your first credit card is just the beginning. in the future, you will need to use the best credit cards. Follow the best practices mentioned above to create a good credit profile so that you can be approved for a better credit card. If you have a good track record and your earnings are rising steadily, banks would also be interested in a higher credit limit.

Since your first credit card is a base card, the next time you can search for a card that offers benefits that fit your lifestyle. For example, if you think you are a traveler, it would be better to get a card with exciting air miles and free access to the airport lounge. Try to create a combination of credit cards based on the benefits provided.

How many credit cards should you have?

How many credit cards
How many credit cards


The Indians began to love credit cards like never before. Recent figures show that credit cards are gaining more and more popularity among residents of Level II and III cities. After all, who would not want to take advantage of all the benefits offered by these cards: rewards, cash back, travel benefits and the ability to make expensive purchases with EMI? To get the most out of these benefits, many people nowadays have 2 or 3 credit cards. But is it good practice to have more than one card? What is the ideal number of credit cards you should have?

There is no set rule on the number of credit cards one should have. You can get as much as you can get approval. It depends mainly on your personality and your credit needs. To help you decide if you should have more cards, let us discuss some advantages and disadvantages.


Benefits Drawbacks
With multiple credit cards, you can make strategic use of the benefits on each card. The risk of getting trapped in debt is higher when you ring up huge bills on multiple cards.
It is easier to maintain a good credit utilization ratio when you have multiple cards as you can shift expenses from one card to another. Everyone is not good at managing finances, so multiple credit cards can make your financial life quite complicated.
Additional credit cards work as financial backup for emergencies and give you peace of mind. Extra credit available to you might encourage impulsive purchases.

When  I have to pay if i have multiple credit cards?


As mentioned above, it can be advantageous to obtain multiple credit cards when you need to reduce your credit usage rate. Low credit use is considered good financial behavior by lenders. When you only have one credit card, it would be quite difficult to stay below the ideal 30% utilization rate. That’s when an extra credit card is useful. If you get a new credit card and keep your credit limit in full, it will significantly improve your credit score. In addition, when you manage several cards brilliantly, banks consider this as a positive feature.

Secondly, it may be wise to get a new credit card with incredible offers on your preferred spending category. Usually, the first credit card you receive has basic benefits and rewards. After using it for a while and familiarizing yourself with how credit cards work, it would be beneficial to ask for a card that best fits your needs.

When could it hurt?

Whether you have a credit card or five, they will only hurt if you do not manage them well. Credit cards are convenient for payments because you can buy anything from clothes to appliances, and pay later in installments. But that does not mean that you should go to great lengths and put each expense on credit. The strategy of your credits against your monthly cash flow is extremely important, and if you miss it, you will quickly find yourself in the middle of a pile of debt.

If you are a reckless spendthrift, it is best to keep only the number of credit cards you really need. Missing several credit card contributions not only destabilizes your credit score, but you may also have to pay a hefty sum in penalties. So, before getting multiple credit cards, you need to ask yourself the following questions:


Do annual fees weigh on the benefits and rewards of your cards?
Will you be able to manage multiple credit card accounts simultaneously?
Will you be able to use all reward points and airline miles on all cards before they expire?
What is the ideal number of credit cards?


As we said before, there is no rule about how many credit cards you should have. However, many people in India prefer to have two credit cards: a basic card with standard benefits and an expense card offering additional benefits in their preferred category. Although it is not advisable to get a credit card just because you are eligible, just relying on just one card is also not wise. An additional card serves as a reserve at the time of the emergency or when you go to a foreign country. In addition, with 2-3 credit cards, you can learn the financial discipline that would help you manage larger loans in the future.

The final result

When you use a credit card, you are required to repay the amount on its due date. Whether you are able to make your payments on time depends entirely on your cash flow that only you can understand. No guide or statistics can define the ideal number of credit cards for you. Get extra credit cards only if you think you can handle it comfortably with other debts.


Why  you must have to pay the full balance of your credit card?

full balance of your credit card
full balance of your credit card


If you pay regularly with your credit card, a missed EMI may not seem like a cause for great concern. However, missing even one EMI is a bigger problem than you would have imagined. Although bank representatives do not come to your door to demand immediate payment, they will charge you a lot of fees. The added credit score will add to your problems. So, let us talk about how a missed payment can affect your credit.

The EMI payment is considered late if it is made after the due date. You will suffer similar consequences when you pay only the minimum amount due and not the total balance remaining.

What are the consequences of late payment of credit card fees?
The effects of a late payment can stay on your credit report for months. It is therefore important to understand why you still have to pay your credit card dues on time.

1. You will have to pay late fees

You will have to pay several fees when you do not pay your bills on time. One of them is late fees. If you do not pay the minimum amount due by the payment due date, the bank will charge a late fee for next month’s credit card statement. The amount of late fees varies according to the amount of the balance of the statement and generally goes up to ¥ 1,000. Below you will find late fees charged by SBI Card, HDFC Bank and Citi Bank.


2. Payment of interest will increase considerably

In addition to late fees on your card, you will have to pay interest on the amount remaining due after the expiry of the due date. Credit card interest is charged daily as long as the balance of your account remains unpaid.

3. Late payments are reported to credit bureaus

CIBIL are the leading credit bureaus in India. Banks are obliged to report your EMI payments to the credit reporting agencies so that they can prepare your credit report and assign you a credit score. Payment history is between 30% and 35% of your credit score. Even if you omit a single payment, your credit score may drop. A lower credit score can make it difficult to obtain new credit at reasonable rates.

Some credit card companies offer you a grace period, for example 5 days. In other words, if you have only 5 days late in payment, late fees will be canceled and late payments will not be reported to the offices.

In addition to these three major drawbacks:

not paying your credit card dues on time, you also risk losing preferential interest rates, promotional discounts on certain brands and additional reward winnings. Therefore, you should always clear your credit card contributions a month so you can continue to enjoy the benefits of the card with a good credit score.

Credit Card Fees and Charges You Must Be Aware Of

Credit Card Fees and Charges
Credit Card Fees and Charges


Credit cards can be very useful for shopping and earning potential rewards. At the same time, it also helps to establish your credit history. However, there is no “free credit card”. As a type of loan, credit cards come with various terms and conditions. Most users only consider the card’s annual fee, but there are several other credit card fees and charges that must also be considered.

1- Annual maintenance fee

This is commonly referred to as an “annual fee” and it is not really a “hidden” charge. Sometimes banks offer a free credit card, which means there will be no membership fees or annual fees on the card for a certain period or for life. If only for a limited period, you will have to pay the fees once the offer period is over.

2- Cash advance fees

Part of your total credit limit is allocated to you as a cash limit. This is the amount you can withdraw directly from the ATM with your credit card. Cash withdrawals or cash advances are quite expensive because they involve fees of up to 2.5% of the amount withdrawn. In addition, what many users do not know is that interest is charged on cash advances as of the day of the transaction; the interest free period does not apply to cash withdrawals.

3- Overlimit Fee

Depending on your credit card, you may or may not be allowed to spend more than the limit on your credit card. Banks do not allow this for free – they charge a high amount as an excess commission for such transactions. Even if you have exceeded the limit of ₹ 10, you will have to pay a minimum amount. For most banks, a minimum of ₹ 500 is charged, but this also depends on the amount by which you have exceeded your credit limit.

4- Late payment charges

If you can not pay the total amount remaining on your credit card, banks offer you the option to pay a minimum amount. If you can not afford to pay even the minimum amount, the bank will charge late fees. A lump sum is billed based on the balance of your statement.

5- Interest Rates (APR)

The annual percentage rate (APR) charged to your credit card also affects your bills, especially when you carry a late amount. This is the reason why credit cards can also be a disaster because the interest rates on credit cards are the highest compared to other types of loans. But this only applies if you do not pay the total amount remaining. In addition, if you only pay the minimum amount due, interest will continue to accumulate daily on the balance, as long as they remain in your account. APR credit card can vary between 30-45% per year.

6- TPS

All credit card transactions will be taxed at the prevailing rates in the country, so users should consider this. GST is charged on annual fees, interest payments and IME processing fees at the current rate of 18%.

7- Foreign currency surcharge fees

Although credit card issuers insist that their cards are accepted worldwide, they never reveal that there will be additional charges for foreign transactions, which are called mark-up fees. . Fees may differ from one card to another and are usually charged as a percentage of the transaction amount.

These are some fees and charges applicable on all credit cards by all banks. A user can also take advantage of low fees and charges to get the most out of their credit card. For example, a credit card with a low foreign exchange fee would be better for purchases on foreign websites or in a foreign country.


How to Protect Your Credit Card Online?

Protect Your Credit Card Online
Protect Your Credit Card Online


The question of whether the Internet is a curse or a blessing is a longstanding debate. Having an Internet connection has many advantages, but, as in a real world, it is also imbued with mischief and deception. Internet is a scary place, especially when we talk about financial scams that are increasing every day with the digitization of monetary transactions. Phishers remain vigilant to encourage you to explain sensitive information on your credit cards, bank accounts, investments, etc., so they can use this information to their advantage and fool you with your hard-earned money.

The credit card scam is one of those activities that has seen a significant increase over the last decade, with a growing number of people switching to plastic money for daily transactions. Regardless of the degree of process security, some people find a way to enter the system and fall prey to their fraudulent activity.

However, some precautions can help you avoid being trapped by a credit card scam. Here are some tips to protect your card information when shopping online.

Use your credit card on trusted websites only

Double check the website on which you are doing the credit card transaction to make sure it is the real merchant. Some poorly designed and obsolete sites should be treated with suspicion. There are sites that seem suspicious, these sites should be avoided. It is advisable to carefully check the domain name because the name of the fake sites does not differ from a character in most cases. Never enter login credentials, passwords, bank IDs, or other personal information on the site without being sure of its authenticity. You can usually trust big names like Amazon, Flipkart, etc.

Avoid clicking on email links, especially in unsolicited emails, as they could lead you to a fake website that looks like a realistic website designed for the sole purpose of stealing your credit card information. Instead of clicking on the link, it’s best to type the address yourself to avoid landing on a fake spammers-owned website.

Avoid credit card purchases in public places

Computers and public networks should never be used for online transactions. Login credentials are often backed up on public computers, increasing the risk of fraudulent activity. Even after the disconnect, it is possible that your keystrokes are recorded by the hackers.

Hackers set up free wifi access without a password, allowing you to benefit from the same wifi signal. In this way, it becomes easy to retrieve your information during transmission. It is best to make credit card purchases on a secure network because sensitive personal information such as credit card information, personal data, etc. can not be stolen by anyone. Wi-Fi connections in public places such as the airport, cybercafe, cafe and other public places are not secure and should be avoided for any credit card transaction.

Use a credit card instead of a debit card

Credit cards offer more protection against fraudulent activities than debit cards. Debit cards do not offer the same level of protection and fraud prevention. How will you recover your money with debit card or credit card fraud? When a fraudulent transaction is made with a credit card, you do not lose money. You only need to report the fraud and get a credit on your statement and your bank account will not be affected by the problem. But with the debit card, your bank will be affected as soon as a fraudulent activity takes place. The fraudster will continue to withdraw the money until the date the cardholder reports the issue to the bank. As a result, there is a probability of losing more money in the case of debit card fraud. The RBI has set some guidelines to automatically protect credit card users against credit card fraud.


Keep an eye on your credit card statements

Every time you use your credit card, a real-time record of this transaction is kept with the bank, which allows the bank to find and recover your valuable money more easily at the time of the fraud. You must regularly monitor your credit card statements to detect all fraudulent and unauthorized transactions. If you notice something abnormal and suspicious, contact the transmitter immediately. Also make sure your statement does not contain any errors or unusual rights. If you notice unusual charges in your statement, contact the issuer to remove the wrong amount and be sure to check that the money has been refunded.

Do not save your credit card information on the website.

While it seems convenient to save your information in your browser or online, it is better to stay inconvenient than to compromise the security of your credit card. Of course, you do not want credit card collectors to know your personal information. Every time you make a purchase on a website, the site will probably leave you the option of automatically storing your information for future purchases. To do this, you simply have to click on “NO”.

In addition to the tips mentioned above, the use of a credit card does not have to be simplified, for example to keep your antivirus up-to-date, activate the one-time password option that allows your credit card to be used. Add an extra layer of security and check your browser settings to avoid it storing your personal information and credit card details. Keep in mind these simple tips on credit cards will surely prevent you from becoming a victim of credit card fraud.

Should You Close Unused Credit Cards?

Close Unused Credit Cards
Close Unused Credit Cards


If you have not used one of your credit cards for a long time, you may have thought of closing it. However, when it comes to personal finance, the seemingly practical option may not always be the right one. Canceling a credit card can hurt your credit score. That’s why a number of experts suggest leaving unused credit cards open. Let us understand the impact of an unused credit card on your credit profile.

Your credit score includes five items: new credit, outstanding, credit composition, credit usage, and credit history duration. Your unused credit card has a direct impact on the last two factors, the use of the credit and the duration of the credit history.

Credit Use –

This is the ratio of your total available credit to what you are currently using. This includes the debt ratio on all your loan accounts as well as the use of individual credit on different credit cards. Financial experts advise users to keep their credit utilization ratio below 30% at all times. Unused credit cards help you maintain a lower credit utilization rate.

Credit history:

Your credit history is not only determined by the oldest loan or credit card account, but credit reporting agencies also consider your last account and the average age of your credit history. your loan accounts. A long credit history is considered preferable because lenders would be more willing to lend to a market-oriented person than to someone who has recently entered the debt field.


When is it a good idea to close your unused credit cards?

Although you should not close your credit card, there are some situations in which it might make more sense to break a card, such as:

When the credit card does not offer you any benefit.

When the annual fees on the credit card are too high.

When you have too many credit card accounts.

If your credit card has a combination of the first two problems – it generates huge annual fees but does not provide the benefits that meet your needs – so it may be wise to proceed with credit card abandonment. In addition, you should not have too many open loan accounts at the same time as lenders find the credit hungry.

Surprisingly, closing a credit card can sometimes lead to an increase in your credit score. This can happen when you have multiple cards from the same bank and you ask them to close a card and transfer the limit to another card. In this case, the credit usage rate of a card will decrease, improving your credit score. Another great way to do this is to close a credit card held for a short time. In this way, you can improve the average age of your accounts.

The final result

Closing a credit card is not recommended, but if it is done strategically, it may not be a regret. This only makes sense when you have to pay a high annual fee without any benefit. Do not just stop using a credit card completely. You should instead try to understand the rewards and benefits of these cards in order to maximize them.

Before closing a credit card account, you need to take a closer look at its advantages and disadvantages, the types of benefits it offers and the damage to your credit score if you close it. The decision varies from one card to another, so you should spend some time on it.


How to Read Your Credit Card Statement

Credit Card Statement
Credit Card Statement

The law requires banks to send monthly statements to their credit card holders, either on their registered e-mail ID or at their home address, at the request of the user. A credit card statement contains a lot of information that can be confusing for a new user.

So let’s talk about these sections in detail.

Due date for payment

The first and most important thing in your credit card statement is the payment due date. If you delay payment of your balance after the specified date, two types of fees will be charged. Firstly, you will have to pay the interest on the remaining amount and second, a late payment fee will also be charged. Interest is calculated as a percentage of the outstanding amount, while late fees are generally fixed and may vary from bank to bank. Remember that late fees will only be charged if you do not pay the minimum amount due.

Failure to pay even the minimum amount due will appear in your credit report, which will result in a decrease in your credit score. Late payments are indicated in the DPD (late days) section of your credit report.

Minimum amount due

Credit card companies allow their customers to pay a minimum amount due if they can not afford to pay the full amount owing. This is only a small fraction of the total amount outstanding on your credit card. If you manage to pay the minimum amount, no late fees will be charged. However, you will have to pay interest on the remaining balance for the time remaining on your statement. Late payment charges can range from Rs 100 to Rs 1000, depending on the total amount outstanding and the policy of your credit card provider.

Total outstanding

Ideally, you must pay the total amount due per month to avoid additional charges. The total amount includes all the EMI you have to pay, as well as the fees collected during the given billing cycle.

Credit limits

On your credit card statement you will find three types of limits mentioned-

Total credit limit
Available credit limit
Cash limit

The total credit limit indicates the amount that has been approved by the bank on the given credit card. The amount shown in the Available Credit Limit section is the amount remaining after your purchases with the card. This is the amount you can still use. When you make regular EMI payments, it is added to the credit limit available with you. A certain cash limit is also provided to card users, which generally represents a portion of the available credit limit. You can use the credit limit by any means, such as online purchases, bill payments, etc., while the cash limit can only be used to withdraw money from the ATM.

Balance of reward points

The credit card statement also shows the reward points you have accumulated so far, as well as its status. Here you will find a detailed table showing the number of loyalty point balances reported from the previous cycle, points earned in the current billing cycle, and unused points.

Account statement

You will also find a summary of your credit card balances in the monthly statement. This section shows your opening balance, which is the limit you have on your credit card at the beginning of the new billing cycle, the amount you spent in the current cycle, the payments you made with your credit card. the card as well as the additional fees collected in the accounts. Billing cycle in progress. This is an overview of your credit card for the current period.

details of the transaction

You can also view in detail the transactions you made during the given billing cycle. This segment includes the date and time of transactions, the amount deducted, any additional costs, the location of the transaction, etc. You should check this section carefully and inform the bank if in doubt about an anomaly.

In addition to this information, your credit card statement may also indicate relevant changes made by the bank, such as interest rate fluctuations, tax rate changes, etc. It is important to thoroughly check each part of your statement and contact your bank. If in doubt. Staying informed is always better than regretting later.