Meta Description: The rise in the use of credit cards in India has created transparency in financial transactions, as well as convenience for cardholders. This advance has been slow, and when it began, people had some apprehension to apply for a credit card.
The Reserve Bank of India’s nudge towards a cashless economy became a full-blown push in 2019 when the number of electronic transactions rose to new heights from the previous year by a whopping 163%. Credit card and debit card transactions put together grew by 24%, and in terms of the monetary value, they exceeded an amount of $204 billion, according to S & P Global. This data may come as a surprise, as only a few years ago, many people in India didn’t possess a bank account, much less know how to apply for a credit card. Payments made over mobiles and devices were higher than that made by cards within the lockdown of 2020, due to the spread and fear of coronavirus and interaction with other objects, but this anxiety slowly decreased as lockdown restrictions were lifted, and new information about the virus came to light. Most payments by credit cards are done in retail segments, online payments made through credit cards on e-commerce platforms being common.
Cash vs. Cards
The early days of significant use of credit cards can be traced back to 2016 when the government decided to withdraw the circulation of 500-rupee and 1000-rupee notes. The currency shortage, though temporary after demonetization, propelled the use of plastic money in a big way. People were left with the only option of using plastic. This forced people, including a large section of low-income groups and blue-collar workers to open bank accounts. Getting a debit card, followed by a first credit card may have taken a while to get accustomed to, but now the habit has stuck, and using plastic has become a way of life. By the first quarter of 2020, credit card use had exceeded the high levels of ATM cash withdrawals in 2019. Although a substantial amount of cash is presently in circulation, credit cards currently represent around 44% of total point-of-sale and online transaction value.
New credit card applications
In April 2020, inquiries and applicants had dropped up to 6% from the levels of 2019 for a credit card, because of the Covid-19 lockdown. By July 2020, numbers increased to a strong 61%. By October, closer to Diwali, and with the lockdown lifted, the number went further up to 106%. It’s noteworthy to mention here that when a new credit card application is processed, it goes through checks by the credit information company of TransUnion CIBIL. TU CIBIL reported that the demand for new credit cards rose mainly from Tier-2, Tier-3, and small Indian cities.
Facts for first-time applicants
Here are some key points you must know before getting your first credit card:
- Premier cards – If you are a novice at handling credit, you won’t be eligible for a premium credit card. These are the ones with rich rewards, reserved for those credit card users who have excellent credit scores or are high earners.
- Bank accounts – You will need to have a decently robust bank account before you apply for a credit card, with a moderately regular cash flow, just so your issuing credit card company or bank is assured that you will be able to pay bills.
- Age – You will need to be at least 21 years of age to apply, and for the issuance of some credit cards, you will need to be 25 years of age.
- Check rates and fees – Credit cards charge an annual fee, depending on the type of credit card or cash limit. There is also interest charged, on any balances you have from month to month.
- Late fees – Some credit cards charge a late fee, above and beyond interest accrued.
- Documentation – In order to apply, you will need proof of residence and identity (Aadhaar Card for both, or a passport, PAN card, etc.)
The Bajaj Finserv RBL Bank SuperCard is a great option if you want a first credit card. You can apply easily online, and get up to 90 days of loans in case of emergencies. A four-in-one card, this amazing card lets you pay in easy EMIs, with a small monthly interest rate of 1.16%. You can also avail of the ATM cash withdrawal facility free of cost for up to 50 days, plus earn rewards when you shop.
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