Credit cards: Common FAQ’s answered

Amongst the several banking cards that are available, the credit card has always been a popular choice for several reasons. While the requirements and reasons of the usage of the credit cards would differ from person to person, some of the common reasons would include convenient payment access, the means to access large sums, and the ability to repay back the borrowed funds with a low interest rate.

However, like any other banking card usage, there will be several questions and queries asked about the credit cards in India. Given below are some of the FAQ’s and their respective answer about credit cards:

Do I need to opt for a co – signer when applying?

If you don’t have the appropriate credit history or even little credit history, it is not uncommon for the lender to ask for a co – signer before your approval. As a co – signer, the individual must have an established credit history that would share the financial responsibility for the card. Normally, these individuals can be anyone who is a close friend or even a family member. This individual is equally liable for any debt that the principal card owner may gain when using the card. Therefore, the co – signer must be as responsible to using the card, as the primary card holder.

Is opting for a credit card a wise choice for my financial future?

While credit cards can be used for payments and transactions, it can also be used for another purpose, building a credit history. By building a credit early in life, you build a credit history right in the beginning itself, where rates are more affordable. In the future, a good credit would mean lower rates on loans, mortgages and a wide variety of credit cards. One way to start off, is by opting for the student’s credit card where you can opt for small and affordable purchases, while increasing your card limit as your expenditures and income increases.

What are the risks of a credit card?

Applying for the credit cards in India is often the first step to building a credit history. However, the expenditures you make it on is still a choice that depends on you. If you indulge in any irresponsible activity on the card, it will lead to the logging of negative information, which can stay on your credit report for a maximum of seven years. This in turn, will eliminate credit options for certain time lengths. Therefore, it makes sense to keep things easy right from the beginning than to get into trouble later on. However, there are a few steps you can take to ensure that you don’t risk your card:

• Pay your bills on time and in full to avoid added interest and fees
• Always create a budget as it will help you stay within your means
• Do set up account alerts as a security feature.


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