A credit card can be quite the blessing, allowing you to splurge here and now while giving you ample time to collect your finances to make the payment. Here's a guide for the newbie on how to apply for a credit card.

What to look out for

There is a plethora of cards on offer, each with its set of credit limits, interest rates, annual fee, reward points and so on. First-time cardholders usually start off with lower credit limits and, based on spending and repayment patterns, limits are gradually adjusted upwards.

Bear in mind that banks usually mention monthly interest rates to be paid on outstanding card balances. Further, if you only make the minimum payment of one billing cycle, you lose the free credit period of the next billing cycle and interest is charged on the entire outstanding sum.

Some cards also carry annual fees as well as a joining fee. For instance, SBI's Gold Card calls for a joining fee of Rs 299 and an annual fee of Rs 299 but waives charges on add-on cards. On the other hand, Kotak Mahindra's Urbane Gold Card carries no joining or annual fees, but charges Rs 299 on add-on cards.

While you do not necessarily require an account with a particular bank to avail of their credit card, note that some cards an have eligibility criteria. For instance, Axis Bank's Easy Gold Card requires you to have a fixed deposit account with it for at least Rs 25,000. For an HSBC Gold Card, your minimum annual salary should be Rs 2.4 lakh.

Also, given the sheer choice of cards, be clear on what you want out of your card. If you are a frequent traveller, it may be a better idea to look towards those cards which offer rewards discounts on hotels or allow accumulation of air-miles.

For instance, Citibank Credit Cards has on offer a Citibank Premier Miles Card. Under this, you earn 10 miles for every Rs 100 spent on air tickets and 2.5 miles on all your spends, which can then be redeemed for tickets, hotels and car rentals.

But take care not to hinge your decision on reward points alone since it usually takes a fair bit of spending to stack up points enough to be exchanged for something substantial.

Applying for a card

Actual card application does not demand too much of your time or a lot of documentation. Download and print the form from the respective bank's website. Fill it up, attach your photograph and documents as required and send it off to the bank. Done!

As far as documentation goes, you must necessarily provide proof of income. This can be done by providing copies of your latest salary slip, Form 16 or, if you're self-employed, your income tax return. Most banks also require proof of identity and/or residence. There are quite a few documents which can be provided, ranging from copies of your passport, electricity or phone bills. Banks such as SBI, Axis Bank, Citibank, HDFC Bank and others have online application facilities. A few such as Citibank further have facilities to make applications by phone.

In these cases, once you submit your application online, you will be contacted by the bank's representatives for the submission of documents. Banks also allow you to track your application online using the application number. Note, however, that banks are not compelled to issue a credit card even if documents and eligibility are in order.

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