Tips for Choosing Your Ideal First Credit Card

A credit card is a very convenient financial product that you can use to purchase a variety of items ranging from daily essentials such as groceries to expensive products like laptops or televisions. Credit Cards are very easy to use and instantaneously offer quick and easy transactions. You can also use them to get amazing benefits such as rewards and cashback on all your spending.

When you start earning and think of managing your finances efficiently, getting a credit card is one of the first options that come to your mind. However, getting a credit card with no credit history is difficult. There’s also a limited variety of credit cards that you can choose from when you are applying for the first time. This is because if you are a student or have gotten a job for the first time, you probably don’t have a credit history. Without a credit history, you won’t have a credit score, which is one of the most crucial criteria for banks that issue credit cards to someone. Hence, banks are cautious when giving credit cards to first-time users. Banks that issue credit cards to new users also ensure that their credit limit is low so that the bank has limited liability.

Nevertheless, a few banks offer entry-level credit cards, and it is possible to get one if you follow the initial application process carefully. Read the article to gain a better insight into things you need to keep in mind while applying for your first credit card.

Check Eligibility

Every card issuer has a different set of criteria for its applicants. These issuers evaluate your credit card application against parameters such as age, nationality, income, credit score, etc. When you fail to meet these parameters, your application might get rejected. Hence, it is essential to know the eligibility criteria of the bank to which you wish to apply for the credit card.

For reference purposes, the eligibility criteria for HDFC Bank Credit Card are as follows :

• If you are a salaried individual, you must be between 21 and 60 years of age
• If you are a self-employed individual, you must be between 21 and 65 years of age
• You must be an Indian resident or a non-resident Indian
• You must have a regular source of income
• You must meet other card-specific requirements

Choose a Card With a Low Annual Fee

When comparing credit cards, read the Most Important Terms and Conditions (MITC) on the bank’s website to get an idea of the fees and other charges associated with each. Note things like cash advance fees, late payment fees, the interest rate charged on balance amounts, cash withdrawal charges, GST, foreign currency markup fees, etc., to gain a better understanding.

Having a low annual fee for first-time credit card users is beneficial as it helps them build a good credit score with a lower risk. Although a high annual fee comes with many perks and rewards, it is essential to note that higher interest rates are also associated with them. Also, paying high credit card fees as a first-time user might be overwhelming, and debt can accumulate if not paid on time. Hence, if you are using a credit card for the first time, take some time to build financial discipline, and then, according to your spending patterns, upgrade to a credit card with a higher annual fee.

Compare Rewards and Other Perks

There are multiple benefits and perks of different credit cards. Even entry-level credit cards offer a host of special offers to choose from. You can compare these cards and choose the one that offers the most benefits you want. Some credit card types to compare are Lifestyle credit cards, rewards credit cards, travel credit cards, business credit cards, and shopping credit cards. These credit cards offer an array of rewards, such as cashbacks, discounts, reward points, airport lounge access, and fuel surcharge waivers. You must also read the terms and conditions associated with the offers to gain more clarity.

For example, the ICICI Amazon Pay Credit card has no annual fees and offers 5% cashback to Amazon Prime members on all Amazon spend, whereas, for Amazon non-Prime members, it offers 3% cashback. Similarly, for travel-related benefits, Axis Bank offers the Vistara Signature Credit Card, through which frequent travelers can avail themselves of up to 4 premium economy tickets annually by reaching spending milestones.

Avoid Applying for Multiple Credit Cards at Once

Initially, you might be tempted to apply for multiple credit cards at once to get promotional sign-up bonuses, but applying for multiple credit cards at once usually backfires. If you do so, then you will come off as a credit-hungry person to the credit card issuers, and your application might be put at risk. If you already have a credit history, submitting multiple applications for a credit card can hurt your credit score. Hence, apply only at one bank and use that one to gradually build up your credit score. Then, apply for the next after a few months. Ideally, 6 months works best.

Getting a Credit Card With No Credit History

Your credit score is one of your credit card application’s most important evaluation parameters. Lenders are hesitant to give someone with no credit history a credit card. Nevertheless, it can be possible to apply for entry-level credit cards and build your credit history from scratch; in this case, you can consider two options :

Applying for a Secured Credit Card – It is fairly easy to get a secured credit card than an unsecured one, especially if you are a first-time credit card user. To avail of a secured credit card, the applicant must submit a security amount or collateral, which the bank usually keeps as a fixed deposit. One example of a secured credit card is the AU Nomo Credit Card. The best thing about this method is that your Fixed Deposit will continue to gain interest while you spend on your credit card. However, ensure that you make timely payments to build a good credit score.

Applying for an Unsecured Credit Card – For people with no credit history, it is difficult to avail of an unsecured credit card. These credit cards do not require collateral or security amounts. You can try applying for an unsecured credit card if you have sufficient income that shows your creditworthiness. You can get a credit card based on your salary statement; this applies if you are working in a private or public company for more than 6 months. You should apply for a credit card at the bank where you have your salary account, as the document verification process gets easier for the bank.

Best Entry-Level Credit Cards to Choose From

Now that you have a basic idea about applying for your first credit card, you can choose the one that would work best for you. Below is a list of the best entry-level credit cards to choose from :

HDFC MoneyBack Plus—This is a suitable credit card for online shoppers. It offers 10X reward points on shopping through Flipkart, Amazon, BigBasket, Reliance Smart Super Store, and Swiggy. You also get up to 15% off when you dine out at restaurants in select cities. HDFC MoneyBack Plus can easily be availed by those who have their salary accounts with HDFC Bank.

Amazon Pay ICICI Card: Amazon Prime users get 5% cashback on spending, whereas Amazon non-Prime users get 3% cashback. This card is lucrative if you shop through Amazon often.

Axis Bank Ace– As a cardholder, earn 5% cashback when you pay bills on Google Pay and 4% when using Swiggy, Zomato, or Ola. This card is extremely beneficial for all, as one can easily save on their utility bill payments with this credit card.

SBI SimplyCLICK– Get 10X reward points when purchasing through websites such as BookMyShow, UrbanClap, and Cleartip. Also, get an Amazon e-gift voucher worth Rs. 500 as a joining benefit.

The Bottom Line

Applying for a credit card for the first time can be challenging for some people owing to the terminologies, terms, and conditions associated with it that few people know. However, if you have decided to get a credit card, you can research cards and gain related knowledge. This way, you can gradually grow your credit card awareness and apply for entry-level credit cards. Once you avail of this credit card, you can build your credit score and apply for the premium, more rewarding credit card you are eyeing in the next six to eight months. Remember that building credit is a long-term process, and you need to be patient and consistent while managing your finances.