7 Mistakes to Avoid When Applying for a Credit Card

With many credit card issuers aggressively promoting different types of credit cards, applying for a credit card and getting a new credit card looks like a child's play. However, when you actually apply for a credit card, you realise it could be a challenging task. So here are the 7 common mistakes people make when applying for a Credit Card and how to avoid them.

1. Not Applying for the Right Card:

There are a plethora of credit card issuers and types. But, the never-ending options create further confusion when selecting the right credit card. Many people fail to choose the right card that matches their requirements by getting influenced by the advertisements and offers. If you apply for a high-end credit card that does not fit into your income group, your credit card application will get rejected. Similarly, applying for a card that does not suit your requirements will not be useful to you. Therefore, before opting for a credit card, it is essential to understand its features and benefits. Instead of opting for any card that is offered to you by the issuer, choose the card that is best suited to you. Here's how to choose the right credit card in 4 easy steps.

2. Not Knowing the Terms And Conditions:

There could be some hidden terms and conditions or charges that are mentioned in fine print in the credit card brochure and on the website. Moreover, even the salesperson might not be transparent about some of the terms and charges related to the credit card to achieve his/her sales target. There were many instances when cardholders were told that the credit card is free for a lifetime, but the company started charging an annual fee after a year or two. When a cardholder complains about it to customer care, they are told that there is a minimum spending requirement to benefit from an annual fee waiver. Furthermore, people generally ignore some charges like annual fees, late payment fees, rate of interest, forex fees, cash withdrawal charges, etc., that could make a huge difference once you start using the card. To avoid such situations, make sure you carefully read all the terms and conditions, product features, charge sheets, etc. The time invested in research and reading the fine print is worth avoiding unpleasant surprises in the future.

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3. Filling Incomplete Personal Details:

Another common reason for which a credit card application can get rejected is not filling in the correct details in the online credit card application. The credit card issuers verify the information provided with the KYC documents submitted by you. Your name should be an exact match with the name on the identity proof, such as PAN Card, AADHAR Card, etc., and your address should match with the address mentioned on your address proof, such as Driving License, Passport, AADHAR Card, etc. Sometimes, people have a difference in the name or have spelling mistakes on their KYC documents, which leads to application rejection. Hence, when filling out the online credit card application, you should be careful that the information matches the documents provided by you.

4. Inconsistent Income:

The minimum income requirement varies depending upon the credit card you apply for. You should also pay attention to whether the income requirement is net income or gross income. Companies check your bank accounts during a credit card approval process, especially the salary account or primary account, and it helps them verify if you have consistent income. Having an inconsistent income makes your profile riskier for the lender as the financial troubles can increase the chances of missing out or delaying the monthly repayments. Therefore, when applying for a credit card, you need to make sure you have consistent income as per the eligibility criteria of the credit card company.

5. Employment Status:

Credit card is offered to salaried individuals, self-employed professionals, and business owners. To ensure you timely repay your EMIs, credit card issuers have strict eligibility criteria regarding employment. For example, some credit card issuers offer premium credit cards only to existing customers with specific employment status and income groups. Students are typically eligible to get only a Student's Credit Card that comes with basic features. Similarly, most issuers only offer Secured Credit Cards to retired individuals. Hence, before applying for a credit card, it is advisable to go through the employment eligibility criteria of the credit card issuer.

6. Huge Existing Liabilities:

When approving your credit card application, companies check your credit score, existing loans, dues, etc. If your total dues are high compared to your eligible loan amount, there are high chances that your credit card application will get rejected. Having more dues than your repayment capacity indicates financial indiscipline and the chances of missing out on the repayments also increases.

7. Frequent Applications:

If you are frequently applying for multiple credit cards, the credit card issuer can reject your application. Frequently applying for different cards implies you are in a desperate situation of getting a credit card due to a financial crisis. Besides, the issuers check your credit score whenever you apply for a credit card. Frequent credit checks can negatively impact your credit score, resulting in loan and credit card application rejections.

Bonus Point:

Sharing Sensitive Information:

When you are in a desperate situation of wanting a credit card, you can fall into the trap of fraudsters who pretend to be calling from a credit card company, asking you for sensitive information like your KYC details, bank details, OTP, internet banking password, etc. You should not share such sensitive information no matter how urgent the caller makes it sound.

To Conclude:

These are the common credit card mistakes most people make when applying for it. If you don't take the necessary precautions and do the required checks while applying, your credit card application can get rejected. Hence, you should be careful and apply for a credit card only when you meet the eligibility criteria. Bear in mind that frequently checking your credit score and applying for credit cards can negatively impact your credit score.

Warm Regards,
Ketki Jadhav
Content Writer