Amey owns an upholstery furnishing manufacturing company which he started a year ago. His income is erratic and uncertain. At times, even paying utility bills is difficult. As a result, he ends up paying the late-payment penalty.

Last month, he received an offer from a credit card company. He immediately applied for it. He thought with the help of this credit card, he would pay the bills on time. He would get the 40-day window to repay that amount of credit and make the best of the cashback facility the company provided. But his request was rejected. He couldn’t believe it. He assumed, being his first request, getting this card would be a cakewalk.

In another case, Sushil works at a well-known MNC and earns a monthly pay cheque. He has had no debt in the past. He wanted a credit card, but his request was declined. The reason: Sushil had no credit history.

Surely, they were disheartened, but credit card companies usually evaluate based on criteria, such as minimum monthly income, good credit score , credit history, etc. Hence, individuals earning variable income find it difficult to acquire a credit card.

What do you think could be a possible way out, if you are one of them?

The solution to the problem is insta-credit card facility issued against a fixed deposit, by the bank.

Technically speaking, a credit card is an unsecured loan. This means that unlike a secured loan, which is advanced by a bank/financial institution against security like property, for instance, a credit card is offered without any security.

An insta-credit card is a secured loan. If the borrower fails to repay his/her principal/interest commitment, the security can be utilized as compensation. In an unsecured loan like a credit card that is not possible. Hence, banks take necessary steps to ensure that only those meeting certain parameters are qualified to acquire a credit card.

Let us look at the features of insta-credit card:

✔ It is a secured line of credit issued against your fixed deposit
✔ It involves minimum paper work and is issued instantly over the counter
✔ Annual fee is not applicable or very low
✔ Interest charge is comparatively low

This card is suitable for anyone:

• With irregular income
• Less or no credit history
• Poor credit score

Benefits of Insta- credit card are as follows:

1. No income Proof Necessary
   
   One of the biggest benefit is that there is no minimum income criteria. You are granted the card against the fixed deposit that you hold with the bank.
    
2. Less Paper Work
   
   You are not required to provide your photo or identity proof to get this card. As the name suggests it is instant and issued over the counter.
    
3. No Impact On Your Credit Score
   
   A good score deems you a reliable borrower and this can help when negotiating terms of a loan, which eventually saves you interest and other costs.
    
4. Enjoy The Credit Card Facility
   
   Some cards offer reward points or incentives on making purchases on the card that can be redeemed or used at a later date. Find out if such reward points can be of any advantage to you. For instance, some credit cards allow you to redeem reward points at listed apparel stores and/or specific shopping centers.
   
   Similarly, paying your utility bills through credit cards will help you earn more reward points whenever the monthly outgo is high. Hence, you can consider credit card offers that give you similar benefits and facilitate savings.
   
   But, beware of irrelevant benefits the credit card companies offer. Many a times, they offer various benefits on the credit cards which might sound alluring, yet may not be useful to you. PersonalFN advocates ignoring these peripheral benefits and assess the core offering on the credit card. If the card has features that suit you, opt for it even if there are no extra benefits or frills attached to it.
    
5. You Can Build Your Credit History
   
   Often, the loan application of younger applicants is rejected, as they do not have sufficient credit history. Credit rating companies such as CIBIL give a higher weightage to credit history. Your credit report gives you and your lender a clear picture about your credit history, credit behaviour, and credit worthiness. Borrowers who have a credit history of less than 6 months find it difficult to justify this while applying for loan.
   
   Credit scores range between 300 to 900; and the higher it is, the better your credibility. So, the credit score assigned gives lenders a broad view of your credit behaviour and credit worthiness. If your score is below 300, your credit worthiness stands in very bad light in eyes of the lender. You definitely need to work on your credit behaviour and adopt financial discipline to improve it.

Remember to use your credit card smartly. Read all the terms and conditions of the credit card and do not over indulge. Use your credit card only when needed –––particularly, if it is secured against a fixed deposit; because if you default then your outstanding dues and the interest thereon will be settled with it. Hence, use it wisely.

If you have taken the plunge of owning a credit card(s) and have got into a credit card debt, here’s what you need to do to get out of it:

• As far as possible, use a debit card instead of a credit card—the first step to rationalise your expenditure pattern.
• Revisit your lifestyle options if settling your credit card account is taking a big toll on your monthly income. This is a sign that you are overspending.
• Never use another credit card to settle your old credit card dues—this is the beginning of a big debt trap that may haunt you a long time.
• If you are unable to keep your expenses under control, perhaps it times you need to educate yourself on managing your money better, whereby you can be your own financial planner and be in much better control of your personal finances. We recommend that you sign up right away for PersonalFN’s e-learning course “Become Your Own Financial Planner” right away. It would be extremely valuable.

PersonalFN believes that owning a credit card is not a bad thing, as long as you know the means to service your dues. Discipline is the utmost important thing to achieve financial freedom. And to maintain it, you need to be prudent and wise to make the best of the facilities available and not be swayed by impulsiveness.

Happy planning! ☺

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aamerkhan910@gmail.com Jun 28, 2018 I wont too cradite card Apply

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