What is the right way to choose your first credit card? We explain

Ask any newly employed person his first decision on personal finance and you will realize how many of them look forward to having their first credit card. Today’s generation views credit cards as a “must-have” to pay for their expenses as well as make purchases on credit. 

The idea to have a credit card stems from a necessity felt by today’s generation to a status symbol as more people include more credit cards in their wallets to gain from the reward points announced by the banks and fintech organizations.

It is indeed a good decision to apply for a credit card quite early in life considering how it helps build up your credit score for later use. The bank may seek your credit report before issuing a credit card, in the absence of which it may seek details like employment status, salary details, or some investments, if any, you may have made with the bank.

While getting a credit card may seem like a thrilling affair, not many people are not aware of how to get their first credit card. You must not go for some card offered by your bank, but rather check the benefits and reward points offered by the card company.

To avoid unwanted hassle, the following are the steps that may help you get your first credit card easily.

Apply for a credit card in the bank where your salary is credited

This trick helps first-timers who have had no credit cards in the past but wish to have one. Instead of going to banks and fintech organizations showing details of your credit score, ask your bank which credit cards it has to offer, compare the rewards, and then choose as per your need.

The idea behind this is simple. Since it is a salary account, the bank has a long association with the company (where the potential cardholder works). The bank thereby understands the salary range for a specific designation to evaluate the credit card applicant’s profile.

Also, since you will be spending and investing money taken out of the salary account, the bank can easily gauge your employability and your spending frequency, thus, allowing them to advise you on a card that would serve you best in the long run.

Secure your card with a collateral

Take a card against any of your investments, say a fixed deposit with the bank. The reward points and cashback withdrawal offers tend to be more on these cards. Also, the banks will approve a second card application, if you agree to buy a secured card in the first place. Since the cards are secured, there is a better chance of creating a positive credit score history since the banks have something to fall on in case you are unable to repay the credit balance on the card in time.

Check which card suits you best

Where do you shop most – online or offline? Check the sites from where you make most of your purchases. On which credit cards, do they offer the most discounts or cashback offers? This will help you decide which card would help you save most in the long run. Cards offering discounts on fuel purchases if you do not have a vehicle or offers on spa treatments if you do not engage in self-love are of no use. Depending on the cards that declare the most offers on online or offline purchases, you must decide which card will help you save your money in the long run.

Charges matter

Not all cards cost the same. If you are taking a credit card to save money on purchases in the future, why not opt for a card that costs less? “A penny saved is a penny earned”, which is why you must focus on the card’s annual charges too. This means that you must check how much the card company charges, irrespective of whether you use the card or not.

Your first credit card must ring in joy. Choose the right card so that it does not add to your financial liabilities.