Applying for a credit card is a fairly easy process, but many applicants tend to make some common mistakes while they’re at it. These mistakes have consequences – ranging from a flat-out denial of your application to potentially costly penalties in the future. Goes without saying, such mistakes are detrimental in getting the application itself approved, as well as the applicant’s finances.

While you should certainly be warned on getting too friendly with credit cards, the process of applying for a credit card has its own share of common mistakes applicants might make. Let’s take a look at what they are and why you should avoid them.

1. Too many applications over a short period
Applicants often lean towards playing the numbers game when they apply for credit cards. Statistically, you’d think submitting multiple applications would increase the probability of getting approved. But credit cards are a different ball game. Simply applying for as many cards as you can doesn’t mean you have a higher chance of getting approval. In fact, it could prove to be quite the opposite. 

When you apply for a credit card, it may affect your credit score. This is because the issuer will conduct a thorough inquiry over your credit history. Applying for multiple cards makes you look like a reckless borrower. It is recommended to wait six months between credit card applications to avoid hurting your credit score.

2. Not doing due research
There are a plethora of credit card providers in the market, which puts applicants in a useful position as they can opt for one that suits them well. However, many fail to shop around and end up landing on a credit card that may not be best suited to their financial needs. It is vital that you apply for cards that actually meet your spending habits and needs. 

You have to know how you will be using the credit card – what will you be paying for? Do you foresee any big purchases using your credit card, or considerable expenditure each month? If so, you will require a card with a high credit limit. You have to know your financial needs to pick the right credit card. But the good news is that there are a lot of options and it is fairly easy to find the right one for your requirements. 

3. Not understanding the terms and conditions
This might seem a silly thing to overlook, but is, in fact, one that is quite common. Do not choose a credit card based on the company’s reputation or initial offerings alone. Dive deeper into the provisions, terms and conditions, repayment plans and other costs associated with the credit card you are considering. This will give you valuable information like interest rates, annual fees, and reward structures. 

If you travel a lot, you will be better off with credit cards that offer travel insurance and no fees for international transactions. If you eat out often you can check out cards that offer high returns and rewards for dining expenditures. Choose a credit card once you know exactly what features and advantages it offers.

4. Applying before paying the bills

Do not apply for a credit card before you pay off existing bills. While considering your application, the banks will go through your credit report to look at your debt to credit ratio. This ratio has a heavy impact on your credit score; meaning the more debt you have, the lower your score. For a favorable evaluation of your credit card application, it is recommended that you pay off your existing debt before you apply for a credit card. Even if you are unable to pay off all your debt, pay as much as you can before you apply for another card. Always remember: Your credit score is the major deciding factor on whether your application is approved or not.

5. Applying for a credit card for access to inexpensive credit
If your primary objective behind obtaining a credit card is to simply get access to short term funds or loans, you’re shopping at the wrong place. Credit card interest rates can be prohibitively expensive – often as high as 42% per annum. They are therefore more suited for quick access to credit for the very short term, during which you arrange for funds to pay the monthly bill. If you intend to get a loan for any longer amounts of time, it makes more sense to apply at instant loan apps like EarlySalary. With credit availability of up to Rs 2 lakhs at rates as low as Rs 9/day, services like these are by far the more convenient and inexpensive option for borrowers. You also get flexibility in repayments – being able to choose between 3 or 6 EMIs at nominal rates. EarlySalary’s partnerships with leading brands such as Amazon, MakeMyTrip or Big Bazaar allow borrowers to access credit directly while shopping or traveling. Online loan apps are a new-age financial innovation that are taking the country by storm!

Remember – applying for, or acquiring the wrong credit card, can prove detrimental to your finances over the long term. Take your time and do your research before you apply for a card, and you stand to benefit in multiple ways – such as better credit scores, increased spending ability, and reward points and other benefits.


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