Hello,

Guest!

How to apply for a Credit Card in India 2021?

Updated on: 14 Dec 2021 // 36 min read // Credit Cards
Author :(560 posts)
image

Are you new to credit cards? If yes, you're at the right place. It is important to know where to apply for a credit card and how. Also, it is important to first compare different credit cards before choosing your pick.  

How is this blog useful to you?

First, we’ll understand the benefits and types of credit cards as well as how to use credit cards. Along with these, we shall also provide an important point – “What not to do when applying for a credit card”. And lastly, you will have a step-by-step guide to applying for a credit card on Mymomeymantra successfully.

Benefits of Credit Cards in India

Owning a credit card gives you the right amount of exposure to the credit market. With a suitable credit card in your hand, you can access the best deals and offers. This way, you have the chance to save as you spend. 

The following are the benefits of a credit card: 

  • Rewards & Discounts

Unlike a debit card payment or payment in cash, a credit card payment most of the time offers you rewarding deals and discounts. You may get complimentary access to the VIP lounge at airports while enjoying complimentary drinks when using a credit card to pay for a fine-dining event. Along with it, many credit card providers also offer discounts and cashback on online shopping. 

Also, specific credit cards offer rewards & cashbacks on every authorized transaction, like the HDFC Moneyback credit card or Bharat Cashback credit card. With such cards, you can accumulate reward points and redeem them at a later event to save considerably.

  • Helpful in building a credit score

A credit score is a fairly new concept in India, but its relevance cannot be ignored when applying for any kind of credit – be it a credit card with a higher limit or a loan. If you use your credit card systematically and thoughtfully, you can easily pull your credit score up. A good credit score means that you are creditworthy or simply said a reliable candidate for banks to provide a loan. 

However, if used randomly, your credit card can very well bring down your credit score, thus curtailing your chances of getting a better credit card or a loan in future. 

  • Easy EMI conversion

Credit cards offer customers the option of converting a payment into EMIs. Suppose you wish to buy an expensive mobile phone, but it's expensive to pay in a lump sum. Also, you're sure that you won't be able to pay this amount at the next due date. You can convert your credit card payment to EMI instead of a one-time payment in such a situation. 

How is a credit card EMI useful?

Let’s understand this with an example. 

Ms Z, a banker, buys the latest home theatre for Rs. 1,20,000 with her credit card, but instead of paying in full, she gets it converted into 12 EMIs of Rs. 10,000 each. Although the card is wiped for the total sum of Rs. 1.2 lakh, the entire sum is not added in her statement. This means that at the next cycle, she gets a bill of Rs. 10,000 and not Rs. 1.2 lakh. This way, she doesn't have to pay interest on the due amount of Rs. 1.2 lakh but only Rs. 10,000 for the next 12 months, which is an affordable option for her. 

However, an important point to notice is that while the amount is converted into EMIs, Ms Z’s credit limit is blocked for Rs. 1.2 lakhs till she repays this amount in full. 

  • Protection against online frauds

Some of the credit cards come with a facility known as zero-fraud liability cover. This safeguards the cardholder against online fraud. Unlike a debit card, the customer's money is not directly debited from their bank account, and they do not have to pay for this money later too. The important thing is to recognize the fraud transaction and report it immediately. 

Types of Credit Cards

There are disparate types of credit cards available in India to suit the varied needs of customers. These can be classified as follows: 

Secured Cards

Secured credit cards are one where you load a certain amount in your card and then use it to make a purchase. Another type of a secured credit card is a credit card against FD (fixed deposit). Such cards are issued against your fixed deposit account. The limit is usually 70-90% of the FD amount (minus the interest accrued on FD). Such cards charge little interest as compared to unsecured credit cards since there is collateral that banks can use in case you continuously fail to make payments.

Unsecured Cards

All the credit cards that do not require you to provide some kind of security at the time of application are termed unsecured credit cards. Listed below are the different types of unsecured credit cards: 

  • Money-back or Cashback Credit Cards
  • Dining Credit Cards
  • Travel Credit Cards
  • Fuel Credit Cards
  • Zero Annual Fee Credit Cards 

Note: This list is not exhaustive. 

How to Use Credit Cards?

It is one thing to own a credit card and a whole other thing to use a credit card – wisely. When used wisely, a credit card can assist you manage your expenditure while helping you maintain and sometimes improve your credit health* too.

*Credit health – a term used to determine how well a person handles credit. Good credit health can be identified by a good credit score (generally above 700). 

Consider the following points on how to use a credit card wisely: 

  • Know your annual fees

Ask yourself – Do I need a premium credit card? If the answer is no or a maybe, you need to analyze right now. A premium credit card is likely to attract heavy annual fees. Regardless of how less you use your credit card, you will have to pay the annual fee. If you are not sure to use your credit card as much and if most of the benefits offered are of no use to you (like a VIP airport lounge access in times of COVID-19), you should probably ditch the idea. Go for a basic credit card and upgrade later, if needed. 

  • Billing Cycle 

You should always know about your billing cycle, i.e. when is your credit card due date? If you skip this date even by a single day, you will have to pay late payment fees along with interest charged on balance carry forward. If ignored continuously, you will get a notice from your bank, red flags on your credit report and a big-fat penalty for paying – all of which, when looked at in a bundle, looks anything but good. 

  • Identify your needs 

If you wish to build your credit score, start using your credit card for small regular transactions, like your phone bill. This way, you will not depend too much on your credit card while gradually building your credit history. If handled carefully, you will surely have a good credit score. 

If your wish to buy an expensive product, you can try converting your credit card payment into EMIs. This way, you save considerably on interest payments while staying well within your monthly budget. 

  • Use less than 40% of your total credit limit.

If you have a credit card limit of Rs. 1 lakh, try not to use it to the most. Why? A heavy credit card bill will fetch heavy interest if you do not pay in full or miss the due date for even the minimum amount due also, your credit limit will be blocked till the time you pay the entire amount, and your card will be useless in case of an emergency. Along with it, it may impact your credit score as well. 

  • Pay your bills before or on the due date – ALWAYS. 

Missing the credit card due date is the worst idea. The due date is mentioned on your credit card monthly statement. If you are not able to pay your bill in full, the least to do here is to pay the minimum amount due. This is the amount which you can pay and avoid late payment fees. You can use the auto-payment facility, which most credit card providers provide. This way, you never miss your due date.

  • Limit your credit card dependency

If you're noticing that most of the time, you're unable to pay your credit card bill in full, and the balance is carry-forwarded again and again, it means that you are getting too much dependent on your credit card. This is when you need to manage your expenditure to avoid getting stuck with high-interest payments, penalties, finance charges and more. 

  • Never share your credit card details. 

Never write down your credit card details anywhere or share them with anyone – ever. It's like inviting credit card frauds. If someone else has your credit card details, they do not need your credit card in hand to misuse it. As it is told, prevention is better than cure. 

How to Apply for a Credit Card on Mymoneymantra?

Here is a step-by-step guide to apply for a credit card online on Mymoneymantra:

Step 1: Visit the official website of Mymoneymantra. 

Step 2: Click on “Credit Cards” from the top bar menu. 

Step 3: Hit the “Compare and Apply” button. 

Step 4: Fill in the online form thus displayed on your screen with your full name, phone number and email address. Do not forget to accept the company’s privacy policy and T&Cs after carefully reading the same. 

Step 5: Submit using the “Let’s Go” button. 

Upon successful submission, you will have a list of credit cards to apply for. Choose from the list and get instant approval. 

FAQs

✅Should I apply for a credit card online? Is it safe? 

Yes, applying for a credit card online is not only safe but very easy too. The information you share with the provider is neither stored in the system nor shared with anyone. Also, with banks like Axis and Kotak Mahindra coming up with KYC via video call, the need to visit the bank to get a credit card is eliminated. This helps you practice social distancing, which is the need of the hour. 

✅I have been applying for several credit cards at different banks. Is that a bad thing?

Applying for multiple cards or at multiple banks simultaneously are counted under the hard enquiries. Multiple hard enquiries are not good for your credit score. You may be seen as credit hungry, and this is not a good thing. 

✅What are some of the easiest to get credit cards?

HDFC Moneyback, HDFC Freedom, ICICI Platinum Chip, etc., are some of the credit cards that are easy to get, even for those who are new to credit. 

✅Why is my credit card application rejected?

There can be several reasons for the rejection of your credit card application, viz.:

  • Incomplete or wrongly-filled credit card application
  • Unstable source of income 
  • Unrecognized organization in which you’re employed 
  • Your credentials are not up to the mark with the internal requirements of the credit card provider.
  • Another reason can be a low credit score (600 or below).