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5 Smart Tips for Young Indians Getting Their First Credit Card

· 4 min read

As a young adult in India, getting your first credit card can be an exciting step towards financial independence. However, it's essential to approach this milestone with caution and wisdom. Here are five valuable tips to help you navigate the world of credit cards:

1. Explore Special Offers: Leverage Your Connections​

There are several avenues to explore for special credit card offers:

Alumni Offers​

Many banks offer special credit card deals to recent graduates. These cards often come with the attractive benefit of a Lifetime Free (LTF) feature, meaning you won't have to pay annual fees. Some notable alumni offers include:

  • ICICI Bank Sapphiro Card
  • HDFC Bank Diners Black Card
  • SBI Card ELITE
  • SBI Card AURUM

Check with your college alumni association or directly with these banks to see if you qualify for these premium cards with special terms for alumni.

Company Tie-ups​

If you're employed, your company might have partnerships with certain banks, offering preferential rates or benefits on credit cards. Some banks known for strong corporate partnerships include:

  • HDFC Bank
  • Axis Bank
  • AU Small Finance Bank

Check with your HR department about any such tie-ups your company may have. Don't hesitate to shop around and compare offers from different banks based on your alumni status, employer, or existing banking relationships.

2. Leverage Your Existing Banking Relationship​

If you have a salary account with a bank, you're already a step ahead. Banks are more likely to approve credit card applications from existing customers, especially those with regular income. Plus, having your credit card and salary account with the same bank can make managing your finances much easier.

For example, IDFC First Bank is known to provide credit cards to their salary account customers, often with favorable terms. Many other banks also offer preferential treatment to their salary account holders when it comes to credit card applications.

3. Start Small: Don't Chase Premium Cards Right Away​

It's tempting to go for the most prestigious card with the best rewards, but as a first-time applicant, you might not qualify for these. Instead, focus on getting approved for a basic card. Remember, building a good credit history is more important than having a fancy card in your wallet. Be patient and work your way up to better cards over time.

4. Build and Maintain a Solid Credit History​

Your credit history is crucial for your financial future. Here are some golden rules:

  • Always pay your bills on time. Set up auto-pay if possible to avoid missing due dates.
  • Never spend more than you can afford to pay back in full.
  • Keep your credit utilization low.
  • Regularly check your credit report for errors.

By following these practices, you'll build a strong credit score, which will open doors to better financial products in the future.

5. Avoid Risky Financial Products​

When exploring credit options, you'll come across various offers. Be cautious about these two in particular:

Buy Now, Pay Later (BNPL) Schemes​

BNPL might seem convenient, but it comes with risks:

  • It can hurt your credit score if you miss payments.
  • It's easy to overspend and rack up debt across multiple platforms.
  • Late fees and interest can quickly add up.
  • These services often lack strong consumer protections.

Credit Cards Linked to Investments​

These products mix credit and investments, which can be tricky:

  • Your credit limit is tied to your investments, making it hard to access funds when needed.
  • They often have complex terms that are hard to understand.
  • You might be forced to sell investments at a loss if you can't repay your credit card debt.
  • It's easy to take on more risk than you're comfortable with.

Instead, keep it simple. Use your credit card responsibly and keep your investments separate. This approach gives you better control over your finances and reduces risks.

Remember, a credit card is a tool for building credit history and managing short-term expenses, not free money. By following these tips and avoiding risky products, you'll be on track for a healthy financial future. Happy responsible spending!