If you are looking to get your first credit card and you have absolutely no idea then you have come to the right place. Getting your first credit card is always an exciting experience but even more confusing. A credit card is similar to a debit card where instead of having the funds deducted directly from your checking account when you make a purchase, you’ll take on a short-term loan. This loan may or may not accrue interest, depending on when you pay it off.

Some people are in all praises for it and some say otherwise. Trust me, neither of them are lying and it’s out of their personal experience. It all depends how wisely you use this incredible tool. It can be boon by letting you easily make payments just by a swipe or tap even when you don’t have the money and also gets you free rewards, all while building a good credit history. This sounds too good to be true but provided that you are paying back on time and not over-exceeding on the credit by giving up to your temptations. It is important to know oneself, the financial status and your habits to make the right decision for the card otherwise it can put you in a vicious circle of repayments with high interests leading to huge debts and have long-lasting effects.

Here is a list of things that you should know if you are getting a Credit Card –

1. Annual Percentage Rate ( APR )

It is basically the Credit card’s interest rate i.e the price you’ll pay for borrowing money. Here is an example to show how the APR is calculated –

Let’s say you have a credit card with an APR of 10 percent. Your daily rate would be 0.027 percent (10 percent divided by 365). If the balance on your card today is $100, today’s daily interest charge would be $0.27 ($100 multiplied by 0.027 percent).

That 2.7 cents of interest will be added to your balance tomorrow, for a new balance of $100.027, and so on until you make a payment.

2. Grace Period

It is the time period between when the credit card billing cycle ends and the repayment is due. If you pay back within the grace period, you would not incur any interests on the credit and it is almost like a free loan. But if If you leave a balance on your card from the previous month then, not only do you pay interest on that amount, you also pay interest on any future charges from the day that you make the purchase.

3. Cashback

This is the amount of money that gets refunded to your credit card depending on how much is your spending. It varies for every credit card and you should be aware of for making the best use of your card.

4. Rewards/Loyalty Points

These are the points that keep adding depending on the amount you are spending and even the merchant where the payment is being done. Every credit card company has different tie-ups and would be keeping loyalty programs with those particular merchants. Hence, it is beneficial to know about such schemes and use them to gain free rewards.

5. What are all extra charges there?

You should be aware of all the charges that your credit card company incurs in case of an international payment or going over your credit limit or late repayments or any hidden charges if any. Thus, you should carefully read the credit card agreement and be informed of.

6. Annual Fee

This is the fees you pay for the Credit card and it’s service per year or any other timely basis if any.

7. Minimum Repayment

This is the least amount that you need to repay every month and is different for every credit card.

8. Change in Interest Rates

You should be informed of the introductory interest rates and if there are going to changes in it after a particular period of time or the way you make the repayments.

9. Enabling the Gig Economy

Presently, there are so many credit card providers out there trying to give their best to the customers and compete but a very few for the gig economy in India. Self-employed, entrepreneurs, and workers of the gig economy lack access to such financial services in form factors that salaried employees in India get.
We at Bon believe in empowering this workforce and providing them an income generating credit card called the Bon Card” which would help them perform their jobs more conveniently, grow their businesses and in turn help them flourish. Our card benefits include transactions being restricted to business expenses, 0% surcharge on all transactions, route based restrictions, consolidated billing, flexible payment options, and an integrated software to improve accounting & business management.