Expecting your first salary? Here’s why it’s time to get a credit card

First jobs are always special. They are the first step toward achieving your life goals. You work hard all month, waiting for your maiden salary to be credited to your bank account. It's natural to make a shopping list when you're just starting out. But wait a minute; maybe get a credit card instead of paying with cash or your debit card and enjoy your shopping experience more?

Here's why you should consider applying for a credit card if you have just started working.

1) Discounts, cashback, and reward points
 

Banks offer several discounts on credit cards from time to time. You can take advantage of instant discounts, usually between 5% and 20%. These offers are time-limited, so they expire after a specified period of time. The discount amount is usually capped at a certain amount and there is a minimum amount of money that must be spent.

An example of a discount offer can read like this: "Get a 10% discount up to Rs 1000 on electronics between February 1st and 5th on minimum orders of Rs 5000."

A bank may also offer cashbacks when offering credit cards. Along with the discount/cashback, you receive reward points. The base reward points are usually 1 per Rs 50-200 spent. Some banks offer accelerated reward points for specific categories.

For example, IDFC FIRST Bank Credit Cards offer 3x reward points on offline transactions and 6x reward points on online transactions. It also offers 10x reward points on incremental spends above a specified amount (for example, Rs 20,000) in a month and on spends done on your birthday.

The reward points offered by IDFC FIRST Bank never expire. They are valued at Rs 0.25 per point and can be used to pay for online transactions or redeemed against gift vouchers of various online and offline brands.

2) Building credit history
 

Credit Cards are an excellent tool to build a good credit score for people without any credit history. If you use your Credit Card regularly and pay the entire monthly bill on time, you can build a good credit score over a period of time.

With a good credit score and requisite income, you can become eligible for various loans in future. Banks consider a CIBIL score of 750 and above good for loans and Credit Card applicants. The higher the credit score, the better. Some banks may offer you a loan at a lower interest rate based on a high credit score. 

So, get a new Credit Card, use it regularly, pay your monthly bills on time, and build a good credit history. 

3) A savior during emergencies
 

One of the most underrated Credit Card uses is its utility during an emergency. A financial emergency can include:

· Job loss

· Delay in salary

· Temporary salary cut

· Hospitalization of self or family member

· Any other unexpected or unplanned situation that requires money

A Credit Card can help you tide over the emergency. It provides interest-free credit for up to 50 days. Later, when the monthly bill is generated, you can pay the entire amount. If the amount is high, you have the option to convert it into easy EMIs with a tenure of up to 36 months.

4) Learning responsible finance management
 

Credit Cards are a great tool to learn about finance management responsibly. When you spend using a Credit Card, you are getting free credit for a limited period. You also get to enjoy instant discounts or cashback, plus reward points. However, when the bill is generated, you have to pay the amount, usually in 20 days.

You can use the autopay feature to pay your Credit Card dues. When the bill is generated, the linked bank account is debited automatically with the bill amount and transferred to the redit card account. If you are not using the autopay feature, you will have to pay the Credit Card bill manually. You could set a bill payment reminder on your mobile phone so that you don’t forget.

Please note that if you don’t pay the bill on time, the bank will levy a late payment fee and interest. The interest charges usually range from 36% to 42% p.a. (3%-3.5% per month). This is a very high interest rate to pay and can put you in a debt trap. Besides, payment defaults will ruin your credit history and make getting loans difficult in future. 

A unique feature of IDFC FIRST Bank Credit Cards is that they offer you a dynamic Annual Percentage Rate (APR) ranging from 9% to 42%. Depending on your credit history and other internal assessment parameters, when your credit card application is approved, you may start with a specific APR. However, if you repay your monthly bills on time, the bank may revise your APR in future so that it becomes lower.

Also, if you have a lower APR, you can use the balance transfer facility to transfer the outstanding from another bank credit card with a higher APR to your IDFC FIRST Bank Credit Card with a lower APR and benefit from it. So, Credit Cards, when used responsibly, can reward you with many benefits. 

Conclusion
 

Once you get your first job, it is a good time to begin your Credit Card journey. You get to enjoy discounts, cashback, reward points, and other benefits. In the process, you can build your credit history, which makes you eligible for loans in future - that too on favorable terms. If there is an emergency, you can rely on your Credit Card to get you through it. But make sure you pay the entire outstanding dues on your Credit Card every month, or you will incur high interest charges. Indeed, a Credit Card can be one of the best tools to learn financial management. 

You can choose from a range of IDFC FIRST Bank Credit Cards based on your requirement and the card’s features and benefits. The best part is that IDFC FIRST Bank Credit Cards don’t involve any joining or annual renewal fees. Apply for one today!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.