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Darshana Patel
Darshana Patel is a finance and tech writer with a strong background in journalism, financial economics, and political science, working with Loans Jagat. She has immense experience writing content through her previous work in fintech and edtech companies. Her contribution at Loans Jagat is to simplify finance-backed content and academically powered content for the readers.
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Getting a credit card is not enough; managing a credit card is the most important thing. The main reason to manage a credit card is to avoid financial burdens. If it is improperly managed, then it may lead to a financial burden. In short, getting a new credit card does not mean you will start spending to its maximum limit, thinking of paying it later on. The consequences it comes with can be a nightmare. In this blog, we will understand the things to do after getting a credit card in your hands.
Key takeaways:
A credit card provides a revolving line of credit that allows cardholders to make purchases and repay the amount according to the card’s terms. This comes with certain terms and conditions that vary from one lender to another. Moreover, it comes with multiple benefits that one cannot ignore.
New credit cards may bring cashback and reward points for cardholders as per the card type and the credit card issuer’s policies. So, one can gain those points and cashbacks as per the credit card usage.
Some credit cards offer an interest-free period on eligible transactions when the total outstanding amount is paid by the due date, subject to the card’s terms and conditions. This may vary from lender to lender.
A borrower may get additional benefits on the credit card, like fraud protection, travel insurance, security, etc.
A credit card can act as a saviour during an emergency situation. This is because unexpected situations can occur at any time, but funds cannot be arranged immediately. So, a credit card may help in such cases.
Responsible credit-card use and timely payments can contribute to a positive credit history. This can further help you in borrowing loans or any type of credit from the bank.
Hence, these are the major benefits of a credit card for people.
There are certain things one needs to make sure they do when they get the new credit card in hand. It begins with the right credit card activation and credit card usage.
Hence, these are the important things one needs to do after getting a credit card in hand.
Though a credit card brings multiple benefits to people, there are certain drawbacks one cannot ignore.
Getting a new credit card can make you feel like making unwanted purchases, as the money is not directly going out of your pocket. This can lead to more spending and can create more debt for you.
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Improper management of a credit card, such as missed payments or high credit utilisation, can negatively affect your credit score when relevant information is reported to credit bureaus. So, the credit card comes with the responsibility to use it in a responsible way.
Late payment can lead to late payment charges as per the lender’s policies. Hence, setting up an auto-payment can help reduce the risk of missing credit-card payment due dates.
A credit card may have applicable fees and charges, such as annual fees or transaction-related charges, depending on the card’s terms. These need to be confirmed before using the credit card. Hence, these charges may vary from one lender to another.
Hence, these are major drawbacks of credit cards.
Credit cards are not bad as a financial tool, but not managing them properly can lead to bad situations. This is why people need to consider certain things, like proper activation, setting up security factors, using them within limits, etc., as soon as they get credit cards in hand. Hence, it is necessary to manage the credit cards properly to prevent getting into a credit-related burden.
Credit card debt refers to the outstanding amount a cardholder owes to the credit card issuer for purchases, cash advances, or other transactions made using the card.
The two major features of a credit card are that it provides a short-term loan to people and that it provides cashback or reward points to people.
After receiving a new credit card, you may need to activate it and set up the required security measures before using it. Moreover, it is not the first mandatory step for the credit card; this step might vary.
Depending on the card issuer and the card, you may need to activate the new credit card before making transactions. This process can vary from one credit card issuer to another.
Such a situation can lead to a debt trap, which can cause a financial burden on the borrower.
Setting an auto-payment option is not a compulsion for a credit card; it is a choice. This is because it can lower the risk of payment delays or missing the due date.
Some credit cards allow cash withdrawals through ATMs, subject to the card issuer’s terms. Such cash advances may attract applicable fees and interest.
Using a credit card responsibly and making timely repayments can help establish a positive credit history and may support a healthy credit score.
Generally, a debit card needs to be activated before it is used for the first time. This depends on the lender’s policies.
The major risk of having a credit card is that it comes with late payment charges depending on the lender’s policy, and not managing it properly can negatively affect the credit report.
