Credit Cards are often the ideal first credit product for many. They offer a unique opportunity to build and manage credit effectively. This article is designed to guide newcomers through their Credit Card journey and provides essential information on how to choose, use and manage Credit Cards responsibly.

Being Eligible

These are the typical eligibility criteria from Credit Card-issuing banks:

Age Criteria: Primary applicants must be between 18 and 60 years old, while add-on card applicants must be at least 18 years old.

Income Requirements: Applicants need to have a stable income, typically a minimum annual income of ₹2.5 lakh to ₹3 lakh, varying by bank.

Credit History: A good credit history and a high credit score (750 or higher) significantly enhance the chances of getting approved for a Credit Card.

Nationality: Applicants must be either Indian residents or Non-Resident Indians (NRIs), with some banks issuing cards only to Indian nationals.

Employment Status: Stable employment, typically with a minimum tenure of one year, is essential for Credit Card eligibility.

Additional reading: Credit Cards for the Uninitiated: A Beginner’s Guide 

Being Credit-mature

Being credit-mature is as important as being credit-eligible. Let’s understand through the C.A.R.D framework: 

Consistent Income: Do you have stable income to pay your Credit Card bills? Do you have savings to cover your payments in a financial setback? 

Accountability: Can you track your Credit Card bills and pay them on time? Can you safeguard sensitive info like CVV and passwords? 

Responsible Spending: Can you stick to a budget and not exceed your spending limit? Do you understand the card’s T&Cs, such as not letting friends and family use your card or not using a personal card for business expenses? 

Debt Impact Awareness: Do you understand how your card use impacts your credit score? Do you understand the charges, interest rates and penalties? 

Additional reading: Unlocking Credit: How to Boost Your Approval Chances for Credit Cards 

Types Of Credit Cards

Each Credit Card has its own unique offerings, reward structures, merchant offers, discounts and charges. Find a card that aligns the best with your lifestyle in order to maximise its benefits. Here are some examples:

• FinBooster: YES BANK – BankBazaar Co-branded Credit Card: A Rewards Credit Card for online dining, online grocery, and online apparels. Lifetime-free CreditStrong subscription, and reward sharing with family and friends. 
• RBL Bank BankBazaar SaveMax Credit Card: A Shopping Credit Card with 10% discount on movies, 10% cashback on Zomato and up to 1,000 reward points every month on grocery spends. 
• HSBC Visa Platinum Credit Card: A Travel Credit Card with attractive offers and rewards on travel, fuel and retail spends. 
• IndusInd Bank Platinum Aura Edge Credit Card: A Lifestyle Credit Card with up to 8X reward points on select merchants and multiple redemption options including cash credit and airline miles. 

Where To Buy

• Your own bank: Existing and established relationships always help, whether they’re with people or institutions like banks. Your rapport with the bank where you hold your savings or salary account may impact the likelihood of your Credit Card application being approved.
• Pre-approved offers: Pre-approved offers from your bank, particularly if you have a high creditworthiness, present a convenient option. However, carefully review the terms and conditions, interest rates and associated fees before proceeding with the application.
• Check BankBazaar: Online platforms such as BankBazaar list a wide range of Credit Cards customized for diverse customers and enable users to compare features, rewards, fees and interest rates across multiple Credit Cards, assisting in the selection of one that best aligns with their requirements.

Where To Buy When You Don’t Have An Income

• Pledge your FD: Existing fixed deposits can be used as collateral to get a Credit Card with a credit limit of up to 90% of your FD amount. You can continue to earn interest on your FD but if you fail to repay the bills, the bank adjusts the payment against the FD amount.
• Add-on card: Get your spouse or parents to apply for an addon card for you. The credit limit remains the same for the primary and secondary cardholders. Primary cardholder has to provide your ID and address proof details and is obliged to make the payments. 

Using Your Card The Right Way

• Activate Your Card Within 30 Days: For security reasons, the RBI has mandated issuers that if the card is not activated by customer within 30 days of issuance, the issuers are liable to close any such Credit Card account within seven working days on receiving confirmation from the customer. To avoid cancellations, make sure you activate your card within the time limit and set your card limits.

• Repay On Time In Full: Understand your billing cycle so that you repay your bills on time. The billing cycle is the interval between closing dates of two consecutive bills. For instance, if your bill is generated on the 10th each month, then your bill cycle is usually from the 10th of one month to the 9th of the next. You can change your due date at least once. So, you can tell your issuer to modify your billing cycle such that the due date is around the 5th so that you can repay your bills after your salary is in.

• Use Regularly: Regular use of your Credit Card with timely bill payments enhances your credit history, leading to higher spending limits and attractive loan offers. Furthermore, using your card at least once a year is important to prevent deactivation as per RBI’s rules. Apart from financial transactions, processes such as generation of statement, change of PIN or change in transaction controls are also considered as uses that help keep the card active.

• Get Your Waivers & Rewards: No-frills cards are designed to provide basic Credit Card benefits without requiring cardholders to pay a yearly fee, while premium cards offer elevated credit limits, enhanced reward points and lifestyle perks but come with an annual renewal cost. In many cases, annual charges are waived off if your card spends exceed a certain threshold. Plan your card use such that you are able to derive maximum benefit from such offers but remember not to go overboard just to earn more rewards.

Additional reading: Top Reasons For Credit Card Application Rejection 

Credit Health

A large part of using your Credit Card optimally is to use it responsibly. You can do this by checking your credit report regularly to understand your credit situation and flag discrepancies in your report. Stick to a credit utilisation ratio (CUR) of under 30% and avoid applying for multiple cards within a short duration. Most importantly, make sure you pay your Credit Card bills in full on time. Partial or delayed payments can lead to late payment fees and higher interest charges, both of which can impact your credit health. After all, a sword is only as good as the person wielding it. 

We hope this guide will be an indispensable tool for customers and can help them navigate the complexities of getting a credit line for the first time. Do use this guide to know how to use your card right, maximise your rewards, and ensure a rewarding Credit Card experience that lays a solid foundation in personal finance.