A credit card is the best way to pay for several goods and services. It comes with numerous privileges and benefits which suit the lifestyle of a customer. The credit card allows the customer to borrow money from the bank and make payment of goods and services, a person can pay from the smallest to the biggest amount. Cardholder just has to pay the number of your borrowings to the bank and need not pay any excess amount but if you choose to pay the amount in installments then you have to pay the interest on it.

Things to consider while applying for credit cards

Credit is one of the most valuable handy personal financial tools and a cashless economy. Several factors which should be considered before applying for credit cards are given below:

Prepare your document

Prepare all necessary documents required for the approval, make sure that the document should indicate a complete and clear picture of income information including:

  • bank statements
  • previous payslips
  • ID proof, and
  • Other necessary documents. Keep all the documents ready for any type of requirement from the credit card insurer.

Take help from experts

Taking help from experts before applying for a credit card will be more preferable you can also compare and apply for credit cards online.

Financial service companies like Finbucket have professionals who are well informed about the credit card approval process by making it less troublesome for the customer, they can help with the process of documentation and other formalities.

If you have a low credit score then taking help from experts will make more sense they can easily help you apply and it gets approved also they can help you apply for secured credit cards.

Choose your credit card carefully

Choose your credit card after considering your needs and repayment capacity and understand the nature of your expenses as well. Do not choose blindly when a card is offered by a bank. Go for the card with maximum benefits such as:

  • Low-interest rates
  • Extra miles on air travel
  • Reward points
  • Discount, etc.

This will able you to manage and utilize your expenses efficiently with the card.

For example, if you want to use it for shopping then prefer a credit card that offers a better reward point on shopping and the co-branded card will be more useful for those who travel a lot by air.

It is easy to collect reward points and easier to lose them

The customer can not make the benefits of reward points in the following cases:

  • If the reward points have expired.
  • You have not spent the minimum amount for a reward to be valid.
  • The store you have visited is not on the list of your credit card benefit providers.
  • If in case the terms and conditions have been changed by the bank in respect of reward points.

Check your credit score

To check your credit score is the most important step, not having an appropriate credit score can make you suffer because no credit card company will approve your application if you do not have the same as it reflects your creditworthiness and repayment ability along with your credit and repayment history. A credit score is calculated on a parameter of 300-900 and a score of 750 or above that is an excellent score. The credit score also shows past and existing credits and how they are managed by the customer.

How does a bank determine the limit on your credit card?

The insurer provides the credit limit which is the maximum balance and the bank controls your purchasing power by setting the credit limit on the card where on the other hand credit limit helps you in maintaining a good credit score. The ratio on the credit card balance is also known as the credit utilization ratio and it plays a vital role in determining the credit score.

The credit card insurer provides a different criterion for calculating different credit card limits for all different individuals. Let us discuss the few common elements that help the banks to determine the credit limit.

Credit history

It is the very first thing which is done by the banks and other credit card insurer before approving the application also your credit score helps them out to decide the credit limit on the card. If you were able to maintain a good score for a long time period and your record shows that you have been a disciplined borrower in the past than the probability of getting a higher credit limit will increase. Having no credit history can be equally harmful as there will be no previous data that the bank can rely on

Income and Debts

Your income plays an important role in determining your credit card limit, the amount of income you generate will affect the amount of debt which is affordable for the consumer to pay, not just the income but the bank also consider the debt to income ratio of the customer, if you have the higher debt-income ratio then the credit limit will be lower. The way of managing debts also plays an important role in setting up the credit limit.

List of other credit cards

Banks obtain information and other credit card providers before setting up the limit on a credit card because the limit on an existing credit card helps decide the limit of a new credit card. If you already a member of another bank then it will be easier to get a higher limit on a credit card.

Types of credit cards

There are different features for different credit cards which vary from each other and all of them allowed specific limits. If you apply for a basic card then the limit will be lower even if your credit score is good enough because the maximum limit by the insurer on the basic card is set on the low value.

Other factors

Bank may or may not consider some other factors such as:

  • The shopping behavior of the customer
  • Whether the customer frequently travels or not, etc.

It is applied when you wish to take a co-branded credit card the bank will monitor your previous travel expenses and set the limit on credit card accordingly.

How to apply for a credit card?

A credit card can be applied in two ways:

Online

  1. For the online process, an individual has to visit the official website of the bank and apply for the credit card of their own choice after going through the criteria.
  2. The customer can also make an application through a financial website such as Finbucket.com
  3. To avail of the credit card, the customer can also email the bank if necessary.

The following steps have to be taken if the customers want to make an application through financial websites

  1. Visit the website and choose credit cards on the top of the page.
  2. The second step is to check out the list of available credit cards also the customer has another option to filter the list based on the name of the bank and other criteria as well.
  3. Select the card you wish to procure and then select the eligibility criteria link.
  4. Answer the provided question, select instant applies then fill out the form and submit it.

Offline

The customer can also apply for the credit card online and have to follow the steps given below:

  1. Visit the branch of the bank from which customers wish to avail of the credit card form.
  2. If you meet the eligibility criteria then fill the necessary form with required documents.

What are credit card numbers?

A 16 digit number is available on every credit card and this digit signifies:

  • The first digit signifies its system
  • Third stands for travel or entertainment car.
  • Fourth stands for Visa card
  • Fifth for Mastercard, and
  • Sixth stands for discover card.

Credit Card from different banks and their Rate of Interest

Banks Interest Rate
State Bank of India Up to 3.35% pm
Citi Bank 37.2% pm to 42% pa
IndusInd Bank 3.83% pm and 46% pa
Kotak Up to 3.5% pm
HDFC Bank Up to 3.4% pm
Axis Bank Up to 3.25% pm
American Express Up to 3.5% pm