Getting a new credit card is exciting. Maybe you're looking to use it to purchase a new laptop, or perhaps you're eager to take advantage of the complimentary offers on the card. Before you start swiping, there are certain things that you have to do to set up the card and get it sorted.
If this is your first credit card, or if you've upgraded to a premium card, taking a little bit of time to understand the features and benefits of your card will help you set it up correctly and avoid costly mistakes down the line.
Here are ten things that you have to do when you get a brand-new credit card.
Activate the card
This is the crucial first step you need to take as soon as you receive a new credit card. Your card won't function until you activate it. New credit card users often make the mistake of placing the new card in their wallet, with plans to activate it later. They then forget the activation and remember it only when they see their card getting declined when needed.
To avoid this blunder, make sure to activate a new card immediately. You can find the activation instructions on the pamphlet that comes with the card. You also have to set the PIN number for the card at this step.
You can activate the card by visiting the issuer’s website or by using phone banking. Follow the instructions and get your card activated to make it ready for use.
Link the Card to your Bank Account
Once you receive the card, make sure to download the mobile banking app of the card issuer. You can manage every aspect of the card using your smartphone. You can:
- Track credit card spends
- Review your credit limit
- Pay your credit card bills
- Activate/freeze it
- Cancel your card if you misplace it
And more. Additionally, you can set up notifications that alert you every time your card is used. This helps you keep an eye on your card, detect fraud quickly, and report it to the card issuer.
Understand your Credit Card Statement
Credit card statements contain crucial information about your card. To be a responsible credit card user, you need to understand the statement carefully.
What to look out for on my credit card statement?
Here are the top terms to look out for on your credit card statement:
- Statement date
This is the date on which the credit card statement is generated. If you're late in settling the bill, the interest will be calculated from the statement date.
- Payment due date
This is the date by which you have to settle the credit card bill. Keep in mind that there may be some delays between the date you pay the bill and the day the bank receives the amount, based on the mode of transaction.
We highly recommend that you pay your credit card bill 2 – 3 days before the due date to account for payment processing delays and avoid any unnecessary interest charges.
- Billing cycle
This is the period for which the statement is generated. Generally, most credit card issuers follow a 30-day or 40-day billing cycle.
- Grace period
The RBI has announced that the late payment charges on a credit card are applicable only when the due amount is not paid for more than 3 days from the due date. This period of 3 days after the due date is known as the grace period.
If you don't settle the due date by the grace period, you have to pay additional late charges and interest penalties.
- Transaction details
This includes a list of all the purchases you have made using the credit card during the billing cycle. You can find details on the amount spent, the date and time of the transaction, and other information. Additionally, if you have used the card to withdraw cash from an ATM, you can find the relevant details noted as well.
- Total amount due
This is the total amount you owe the card issuer. It includes the transaction value during the current billing period, any outstanding carried forward from the earlier cycles, late payment fees, interest charges and any other penalties, if applicable.
- Minimum amount due
This is the minimum amount you have to pay the card issuer to avoid damaging your credit score. It's generally 5% of the total amount due.
However, keep in mind that, even if you settle the minimum amount due, interest on the unpaid amount and late penalties are levied. Paying only the minimum amount could lead to a debt trap, making it difficult to settle the bill. We highly recommend that you settle the total outstanding amount due by the due date to avoid extra charges.
- Credit limit
This is the maximum amount you can spend on the card in a billing cycle. For example, let's say you have a credit limit of Rs. 1 lakh and spend Rs. 60,000 on it. Then, you can spend only the remaining Rs. 40,000 until you settle the unpaid bill amount. Once you pay the amount due, the entire limit of Rs. 1 lakh is restored.
- Cash advance
This is the amount that you can withdraw as cash from an ATM. It's a percentage of the credit limit. However, keep in mind that cash withdrawals attract high fees, and the interest rates are also expensive.
- Reward points
These are the loyalty points that you earn every time you spend using your credit card. For example, your card may award you with 1 reward point for every Rs. 100 spent on it. You can then redeem reward points for discounts, offers or even use them to settle your credit card bills.
Set up autopay
The golden rule for credit card usage is to pay the bills on time and in full every month. This helps you build a timely repayment history as well as a good credit score. Even a single late payment can damage your credit, especially if you’re just getting started.
With multiple bills to settle and numerous daily tasks, it’s easy to forget to pay your bills on time. By setting automatic payments, your credit card bills are settled on time every month without your intervention.
You can set up autopay to pay the minimum amount due or the total outstanding as per your convenience. We highly recommend that you pay the full outstanding to avoid extra charges.
Understand the Rewards Program
One of the biggest benefits of owning a credit card is that it gives you access to a loyalty program. Every time you spend on the card, you earn reward points, cashback and other offers.
Before you start using the new credit card, make sure to understand the benefits and features of the rewards program. Then learn how to use the card smartly to get the maximum value out of the program.
These five steps on receiving a new credit card help you be a smart and responsible credit user. So, make sure to complete these actions before you start using your brand-new card.
FAQs - 5 Must-Do Things When You Get a New Credit Card
- Is it necessary to sign on the back of the card?
Even though most credit cards have a strip to sign on the back, it’s no longer mandatory. Long gone are the days when cashiers used to check for fraud by verifying the signature on the back. With OTP verifications and chip-enabled cards, this feature is slowly becoming outdated.
- How do I report a lost or stolen card?
You can quickly block/hotlist the card by reaching out to the customer care team of your credit card company. We highly recommend that you add the customer card number to the contact list as soon as you get a new card, so you can contact the team immediately during an emergency.
- My new credit card is not working. What should I do?
Probably, your card is not yet active. Follow the instructions that came along with the card to activate it and set a new PIN. Try using the card now. If still, it's not working, you can get in touch with your credit card company's customer care team to help you.
- What's the difference between a VISA credit card and a Mastercard credit card?
VISA and Mastercard are global payment technology companies that handle the backend processing of transactions on your card. There is no difference in day-to-day usage for the user, irrespective of whether it's from a VISA or Mastercard.
- What is the CVV number?
Known as the Card Verification Value, it’s a unique 3-digit number printed on the back of the card, to the right side of the signature panel. You have to enter this number to verify your card for online transactions. So, never disclose the CVV to anyone.