Whether you are a college student or a salaried professional, everyone can benefit from a Credit card. However, if it’s your first time picking one for yourself, then you might find the task somewhat challenging. That said, you needn’t worry as you will find this guide quite helpful.

So, let’s just get started!

Step #1: Check Your CIBIL Score

When was the last time you checked your credit score? It’s possible that you are hearing about it for the first time, which is fine. However, must know its significance in your life and that’s not limited to just Credit Cards.

Your credit score is used by banks to assess your creditworthiness, i.e. how much are you deserving to get credit. It’s based on a variety of factors including your past loans, credit card payments (if there are any), income, age of credit history, etc. A large number of banks check the CIBIL score which varies from 300 to 900. Ideally, your score should be above 750, especially if you want a card with a decent credit limit.

Step #2: Calculate Your Budget

Do you know much money do you earn and save every month? You should have a fair idea of your budget so that you can get an appropriate card that can meet your requirements.

Usually, the more credit limit you get, the better. This is because a higher limit means more financial flexibility. However, you must remember two things:

• Your credit utilization shouldn’t be above 35%. So, if your card has a limit of Rs. 1 lakh, then you should not spend Rs. 35,000 a month.

• You are allowed to prevent fines and penalties if you make the minimum payments which are around 2% of your credit card bills. However, minimum payments hurt CIBIL score. So, you should always try to pay the bills in full.

Step #3: Compare the Options

There are all kinds of credit cards in the market. However, you want the one that offers most benefits. So, compare your options on the basis of the following:

• Interest rate: When using credit cards, if don’t want to pay a bill in full, the balance is transferred to the next month. It also attracts an interest rate which varies from one card to another. Naturally, you want a card with the lowest interest rate. However, note that some card issuers offer 0% interest rate but that’s only for a promotional period. So, make sure that you don’t fall for this trap and ask the interest rate that applies after the promotional period is over.

• Fees and charges: Most credit cards come with various types of charges such as annual charges, application fee, late payment fee, over-limit fee, etc. So, make sure you ask about these to make a fair comparison.

• Perks: There is a lot of competition in the credit card business which is why the card issuers offer attractive perks to woo the customers. For instance, some card cards offer 1% to 2% cashback on every purchase, no annual charges, etc.

Step #4: Look into Co-Branded Credit Cards (optional)

Co-branded credit cards are cards that are generally offered by a bank and a travel company, ecommerce platform, etc. as a joint product.

Travel credit cards are the most popular form of co-branded cards which offer travel-related perks such as massive discounts on flight bookings, baggage fee waiver, free travel insurance, etc. Examples include ICICI Jet Saphirro, SBI Air India Signature, etc. Similarly, there are co-branded cards for online shopping such as HDFC Snapdeal Credit Card, Yatra SBI Credit Card. These offer extra discounts on select ecommerce portals.

You can consider co-branded credit cards if you need credit for specific purposes such as travel or shopping.

That’s it! These are the steps that you should take when you are applying for a new card. If your credit score is low, and you are having getting a card in the first place, then you can also consider getting a secured card instead in which you can offer money as “security”. Good luck!

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