Odishatv Bureau

Several financial experts try to explain the upsides and downsides of credit cards, but if you are a first-time user, you should know what it brings to your table. So, below are the four things you need to know before applying for a credit card.

1. Enhances your credit status

Since you are a newbie, your prime focus should be to build your creditworthiness. The issuer sends you a credit report presenting all your credit activities during the month. Pay your card bill on time to stay on top of your game. If the user fails to pay the bill, the lender levies a late fee, affecting your credit score.

2. Clear your debt on time

Though the idea of a credit card is to finance your expenses, things can go topsy-turvy if you fail to pay your debt. It may also lead to bankruptcy, impacting your credibility in the end. So, never spend more than you can afford.

3. Keep a tab of your purchases

As a first-time user, you will be thrilled knowing that you can buy anything within the credit limit. But woefully, most people miss tracking their purchasing activities. It adversely impacts one's spending ability and adds to total debt. So, keep a tab on your daily expenses incurred with the card.

4. Spend Less Than Your Credit Limit 

Different credit cards come with different credit limits. The lesser the credit card limit usage, the higher the credit score, and vice-versa. For instance, A and Mr. B both have credit cards with a top-up limit of Rs 50,000 each. A spends 60 percent of the credit limit, while B spends 30 percent of the same. So, B has better creditworthiness. 

If you think that having a credit card grants you the luxury to spend unnecessarily, then you are wrong. Every rookie credit card user should know the details of what it can offer that other financial tools fail to. Doing so saves an extra buck and aids you in building a good credit score.

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