The other day I used my credit card to buy a new smartphone. But my friend asked me that………

Why did you take a loan

To own

A smartphone?

Are credit cards good or bad?

Many people actually feel that if you are using a credit card it means you don’t have enough money. But please remember that credit card companies will offer you credit cards only if they feel you are rich enough. They will issue you a card if they feel you possess the ability to repay them.

But then a question pops up. How do I get to know if I am eligible to own a credit card or no? This exact same question I am going to answer in this write-up.

How do credit card companies check your financial ability?

So first let’s understand how will you come to know if you are eligible to own a credit card or no

• Age Requirement – If you go and ask in any bank generally they will tell you that the minimum age of 21 years is required. A little bit plus-minus may differ from bank to bank but it will be safe to say that the thumb rule is you should be at least 21 years of age.
• Income Requirement – Again, this can differ from bank to bank or more accurately from company to co.pany which issue the cards. Generally speaking, the banks appreciate a minimum monthly income of Rs 20,000.
• Income Tax Return (ITR) – Banks also check the number of returns you file, the higher the number of returns the better the chances of you getting a credit card.
• Credit Score – Credit Score is something that establishes your creditworthiness. For eg. If I have taken a loan and I am repaying the instalments on time, that means my credit score increases or I already own a credit card of another bank and my credit history with them is good that means my credit score increases. There are many apps available which you can use to check your credit score. The one which I will suggest is “the Cred” app, it also rewards you for paying your bills on time. Again, the thumb rule is the higher the better.

Why use credit cards?

You will be having a question that if I have money in my bank account why should I use a credit card? Some people’s ego gets hurt for doing shopping by using money which is not theirs. I am here to answer you guys. There are a lot of benefits of shopping with credit cards which are as follows:

1. It is easy and convenient to use.
2. The moment you swipe a card you get reward points, and what do you do with these reward points? You can easily redeem these reward points to do more shopping!
3. Sometimes the card companies give their customers free movie tickets for using their cards.
4. Some credit card companies also provide free domestic and international airport lounge access to their customers.

Where is the problem?

I am sure you would have understood by now that credit cards are only for creditworthy people. I also told you that it is to use, convenient, you get rewarded every time you swipe, etc. If there are so many benefits then why don’t people use credit cards? Most importantly I feel why people don’t use credit cards is because they fear things like what if I am not able to spy the bills on time? Or what if I forget to pay the bills on time? Some of the downsides are:

1. Huge late payment fines – I myself had an experience where I was in a remote place in Karnataka without any access to banks or even network in case of online payments that u was not able to pay my bill on time. My bill for the month was Rs 1200 but the bank charged me an additional Rs 2500 for not paying my bill on time. But they reversed it after I had a series of conversations with the customer service.
2. Needs financial discipline – Those who don’t have control over their spending should never use credit cards. Inculcate in yourself financial discipline and then go for credit cards.

The solution to late payment fines

Use an auto-debit facility. Generally, banks provide this facility to save you from the hefty late payment fines, they debit your account on the due date or sometimes a day before the due date.

I have tried to include everything that I could in this article, but if you still have any questions feel free to ask me the same in the comments section.

Spend Wisely! Save Wisely!