Posted by Owning a student credit card is proof of a responsible and directional mindset. With the aim to enhance their credit scores, build good financial habits, and avail numerous benefits offered by the bank, the unemployed students get the provision to own credit cards. Owning and managing is a task of responsibility; hence, informed choices can help one in the long run. Here is a simplified guide to help students make mindful and responsible decisions. Beginning with the simplest and easiest before heading on to the list. Regardless of your choice of the best credit card in India, ensure that you use a credit card app regularly to monitor your expenses.
Tips for Responsible Credit Card Usage
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Familiarity with Credit Card
The most basic step to begin with is choosing the right credit card. There are wide varieties suiting the personalized needs and lifestyles of individuals. Choosing one among them should not be a random decision but a well-informed one. Understanding your lifestyle and checking your ability to use the type of reward points are among some factors that help you determine the right choice. Go through these and seek guidance from a professional for the right choice.
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Read the agreement
Reading terms and conditions and the agreement isn’t a usual habit, but important in the case of finance. While opting for a specific credit card, you must know all the charges, interests, penalties, and rates applicable to your finance-based action. It helps to make informed choices and responsible use of the card. You must also know the billing cycle date, due date, and other information. If you own a card, check the same in the credit card app or connect with customer care.
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Informed Expenditure
Getting a credit card does not mean owning loads of money. It simply means access to a specific amount of money that has to be returned. Inability to return it timely will require you to pay interest charges. Therefore, spending within the limit and being able to pay back is the only wise decision. Otherwise, the consequence is diving deep into the ocean of debt. Getting attracted to lucrative buying options isn’t a responsible approach.
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Pay timely
Timely payment is important for responsible usage and is emphasized by every expert. Not only does it impact credit scores, but it also leads to heavy debts. The inability to meet the deadline leads to the addition of balance in the next cycle, where interest is also levied on the remaining amount. It leads to useless and additional expenditure. The missed or late payments are also reflected in your credit score, which will harm your ultimate aim. Set up automatic payments or reminders to act wisely.
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More than minimum payment
Balance on credit cards is chargeable with interest rates. Paying only the minimum amount intends to keep you in debt. To break the cycle, pay more than the minimum amount to quickly clear the debt. Additionally, no charges are levied on more than the minimum balance payment.
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Low credit utilization ratio
The credit utilization ratio represents the quantity of available credit and is expressed in percentage. Sticking to a specific percentage is an expert-recommended tip helpful for your goals. The ideal ratio is 10%, but the maximum allowed is 30%. Going beyond this ratio negatively impacts credit scores. Use a credit card app to track your distance from the threshold. The rule applies to all credit cards regardless of using the best credit card in India.
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Monitor the Credit
The ultimate aim of gaining a credit card from a young age is to build credit. Regular monitoring the same helps the students smoothly reach their goals. Use the credit card app for information on every bit of your action. Do check the statements for technical problems or fraud. Take immediate action depending on the requirement.
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Set up alerts
Setting up the alerts helps you remain updated and take immediate action. It is necessary to prevent late payments, recognize fraud activity, and track spending. The students can add alerts for reminders of payment due dates, balance updates, posted payments, and approaching credit limits. Additionally, the alerts should also inform about purchases, foreign transactions, card declines, balance transfers, and cash advances.
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Stick to a single credit card
Lucrative offers and rewards on new cards tend to attract youngsters to own multiple credit cards. However, managing too many is a challenging task requiring a more informed and responsible approach. It is harder to track the expenses, make timely payments, and focus on the first credit card you own.
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Efficiently manage the first credit card
The focus on a first credit card is due to the ‘credit age’ concept. The longer usage with good habits exhibits your nature and finance management techniques, which might mess up during certain financially unstable circumstances. In such a scenario, getting a loan might be difficult. However, your credit report and relations with the bank will be able to take a stand about your financially responsible attitude and help you get better offers. Hence, the first credit card is the key to the trustworthiness of a bank.
Advantages of Student Credit Cards
The different benefits of the student credit cards are:
- Builds credit for loans and better offers
- Imparts safety to users
- Rewards and perks suiting your lifestyle, thus saving money
- Acts as an instant source of money for emergency
- Aids to learn positive credit habits
Features of Student Credit Card
The different features of student credit cards are:
- Offers extended validity period of five years
- Student-specific benefits include discounts on student brands, access to special events, and others.
- Allows low credit limit and cash withdrawal limit
- Offers credit education resources
- Convertibility to normal credit card
- Do not include annual fees
- Engaging reward programs
Frequently Asked Questions
Q1. What is the minimum balance on a credit card?
Ans. The minimum balance refers to the smallest amount of money to be paid monthly to avoid messing up your credit score and clearing the bank debts slowly.
Q2. What is required to apply for a student credit card?
Ans. Students must possess a college ID, birth certificate, PAN card, permanent address proof, and a passport-size photograph.
Q3. What is the eligibility for a student credit card?
Ans. The eligibility criteria to get a student credit card are:
- At least a minimum of 18 years of age
- College enrollment
- The presence of a co-signer of a fixed deposit account with a predetermined amount.
Additional eligibility criteria may vary depending on the banks and according to the best credit card app in India.
Q4. What are the disadvantages of student credit cards?
Ans. Despite numerous advantages, there are a few disadvantages to student credit cards. It includes the potential to end up in long-term debt, which negatively impacts credit scores and may cost more due to high-interest rates.