Santa Claus comes around just once a year. In the meantime, there are Credit Cards.

Things not to do While Applying for a Credit Card

If you are in need of a credit card and have decided to apply for one, there are certain points that you need to be aware of and try to avoid. Ensuring this would certainly enhance your experience of using a credit card. Check out the things that you need to refrain from while applying for a credit card.

  1. Skipping Market Research: Before deciding on the card to apply for, do conduct market research to figure out the best options for you by considering your needs and eligibility. The benefits of well-conducted research can be enjoyed as long as you keep using the card.
  2. Comparing the various available options would also help you get a better idea of the different categories of credit cards and the overall benefits which they provide in their respective categories.

  3. Allowing a Drop in your Credit Score: The most crucial thing that credit card issuers look for when you apply for a credit card is your credit score. The importance of a high credit score cannot be overstated. There are several online sources where you can check your credit score for free.
  4. If you discover that you have a low credit score, do everything possible to boost it up before applying for the card. If you have any previous unpaid bills on any of your existing credit cards, pay them off as early as possible. The same should be done for all unpaid loans where you have defaulted.

    Bear this in mind that a low credit score would severely limit your credit card choices and options and can even lead to the rejection of your card application.

  5. Cancelling Existing Credit Cards: If you have existing credit cards, don’t make the mistake of cancelling them all while applying for a new one. This is because closing down an existing card account would also shorten the length of your credit history, something that has a high impact on your overall credit score.
  6. However, if any of your existing cards carries high charges and you would want to avoid paying them, you can close that particular card account. But it’s not wise to close multiple credit accounts at the same time.

  7. Applying for Multiple Credit Cards at the same time: Whenever you apply for a credit card, it results in a hard inquiry on your credit report. A single query shouldn’t be a major cause of concern because the drop in the credit score is not significant.
  8. However multiple credit card applications, particularly over a short period of time, would lead to multiple hard queries. The result is a substantial fall in your credit score which would make the approval of your applications difficult.

  9. Falling for the Introductory Offers: It’s not uncommon for the credit card issuers to launch multiple and tempting introductory offers on their cards to attract more customers. These offers may include reward points in bulk, low interest for the initial months, etc., and may seem to hold high value.
  10. However, you shouldn’t take a call on the card based only on the introductory offers. The tendency of ignoring the other associated charges, and terms and conditions can lead to more worries then benefits in the future.

  11. Failing to check out the card-related: Different credit cards charge different amounts for fee categories like joining fee, renewal fee, cash withdrawal fee, late payment fee, interest charges, etc. You should be aware of what you would be paying in the future for using the card; this way you can avoid any unforeseen card-related expense in the future.
  12. Not knowing your Credit Limit: The credit limit on your card is the maximum amount that you can borrow from your card issuer. You wouldn’t be able to spend with your card once you exhaust the available credit until the outstanding amount is credited back to the card account.
  13. So, being aware of the limit that the issuer sets on your card would give you a clear picture of the credit that you have at your disposal.

  14. Not Being Aware of the Commitments: Finally, a credit card would come with a long list of features and benefits for you. However, by default, you would also encounter the challenges of maintaining the card account efficiently. You must exercise strict self-discipline and use the card not only sensibly but also adroitly.
  15. Timely payment of the card dues, protecting the card information from miscreants, and the application of discretion while using the card are of paramount importance. Follow these and you would get the best that the card has to offer; ignore them and you are inviting troubles for yourself.

Bottom line:

Applying for a credit card may not be as easy as it seems to be on the surface. You should not only be fully aware of the above-listed points but must apply them while planning and applying for the credit card. The long-term benefits of doing so are immense and highly rewarding.

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