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Availing your first credit card? Keep these rules in mind

  • Highlights

  • Find out credit card interest & other fees before applying

  • Pay your credit card bill in full and on time every month

  • Maintain a low credit utilisation ratio on your card

  • Enjoy interest-free ATM withdrawal & loan with SuperCard

The ability to make big-ticket purchases with delay, the convenience of going cashless, and the many rewards awarded on every transaction may have convinced you to get your first credit card. What’s more, a credit card can also give you much-needed financial respite during trying times by offering emergency loans. While these benefits certainly boost your finances, there are certain credit card rules that you should keep in mind before availing one. Doing this will help you use your credit card diligently and also safeguard your credit score.

 

Here are 5 important credit card usage rules you should abide by.

Credit card rules and regulations

In order to uphold consumer interest, the RBI mandates every issuer to abide by the general credit card rules and regulations that it lays out from time to time. These guidelines relate to aspects like declaring interest rates and other fees upfront, with any violation attracting penalties.

Nevertheless, the issuers enjoy discretion when it comes to determining the interest rates and other charges on their credit cards. These charges include processing fees, joining fees, annual fees, transaction fees, and ATM withdrawal charges among others. Therefore, as a consumer, discussing these charges with the issuers before signing up for a credit card will help you make informed decisions.

Credit card payment rules

You are aware that every issuer summarises your credit card activities for a particular billing cycle, which is usually a month, and bills you on the billing date. Further, you get a 30- to 45-day window to clear your credit card bill, when the issuer doesn’t charge any interest. But, once you pass the due date, you will have to pay a high interest, which ranges from 36% to 48% annually, on the outstanding dues. So, it’s important that you repay your dues on time to avoid incurring late penalties. If you don’t do so, your outstanding dues will be carried forward to the next billing period, which again attracts interest. This can lead to spiralling debt, so one the best credit card rules is to be spend with care and to pay on time.

Credit card minimum payment rules

To ease repayment, the issuer gives you an option to make a minimum payment by which you can avoid penal interest. Though this seems to be tempting, avoiding this option is the best for your financial wellbeing. This is because when you make the minimum payment, the balance amount still attracts high interest. Though this may not seem to be a problem at first, if you continue making the minimum payment for multiple billing cycles, then, in the end, you will accumulate a fat credit card bill over time, which can land you in a debt trap. To avoid this, pay your credit card bill in full on time.

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Credit card limit rules

When issuing your credit card, the issuer allows you a credit limit based on your credit profile, income, and repayment behaviour of the past. This credit limit is the maximum that you can utilise using your credit card in a particular billing cycle. With time, your Credit Card limit is subject to change due to reasons like increase in your income or improvement in your credit score. While the issuer offers a credit limit based on their understanding of your repayment capacity, you should strive to maintain a low credit utilisation ratio and only use the credit that you can afford to repay. Otherwise, you will incur high-interest charges, which strains your finances and harms your credit score.

Credit card cash advance and withdrawal rules

Just like a debit card, you can also use your credit card to withdraw cash from ATM. However, the issuer may charge processing fees and interest on the amount that you withdraw, which can sometimes be heavy on the pocket. Some issuers also allow you to avail a loan on your credit card during an emergency. This too attracts interest and adds to your liabilities. While it is best to limit your cash withdrawals and emergency loans on credit card, exigencies come unwarranted and leave you with no choice. Fortunately, with the Bajaj Finserv RBL Bank SuperCard, you can enjoy 50-days interest-free ATM cash withdrawals and 90-days interest-free emergency loan as per your credit limit. This allows you to meet emergency without harming your finances!

Now that you have a fair idea about the credit card usage rules, you can go ahead and apply for your first card. To get started on the right foot, check your pre-approved offer from Bajaj Finserv to view a customised deal and expedite your access to credit. Once you are approved, you can make the most of the discounts, reward points and cashback on the rewarding SuperCard to enjoy savings of over Rs.55,000 annually!

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