Pros and cons of using a credit card

Banks approach new employees by offering credit cards even before their first month's salary. They also offer new cards with various names to impress the card users. In this context, those who are planning to take a credit card for the first time should weigh the pros and cons before taking a decision.

Hyderabad: Credit card is useful for making purchases from time to time even if we don't have money in hand. A person's income, credit score and credit history are all important when it comes getting credit cards. At the same time, how you pay your bills after getting the card has an impact on your credit score. Credit cards are easy to get for those who have a good payment history. If you have a credit score above 750, you are considered a good customer. People whose income is not stable should be careful while taking the card. Such people should consider a fixed deposit-based credit card instead of a regular credit card.

• Why do you need a card? For daily expenses? Or use it for online purchases? Decide in advance. What are your requirements while taking the card? You should know whether the card you are taking is beneficial to you or not.
• If you do a lot of online shopping, look for a card that offers more discounts. New-generation banks are offering many special benefits. Credit cards are also offered quickly. Check the respective bank websites for details.
• When taking a card, you should be careful about spending. Don't make purchases that will be useful sometime in the future. Buy only what you need for now.
• The cards offer discounts on electronic goods, food delivery companies and some other brands. What matters is how much you need them. Don't fall into the trap of unnecessary discounts just because you have the card.
• Banks say that there is no annual fee while taking the card. But, some rules apply to this. This benefit is availed only on a certain amount of purchases made in a year.
• Banks offer co-branded credit cards with leading brands. You will benefit from these types of cards only if you use the respective brands a lot.
• A credit card is beneficial only when the bills are paid within the due date. In cases like minimum payment and bill arrears, high interest has to be paid. Under no circumstances cash should not be withdrawn by using a credit card. Annual interest on this is likely to be 36 to 40 per cent.
• If you already have a credit card, take a second card if necessary. One high-limit card is better than two or three low-limit cards.