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It has now become very common for us to get calls from bank representatives with requests to apply for a credit card. Many of us are often tempted by the lucrative schemes attached with these credit cards.

But before applying for a credit card, you must have an idea on what you are signing up for. Otherwise, you may be financially hit hard in the future.

Here’s a look:

Higher interest rates

Credit cards offer different lucrative schemes to its holders. But beware each and every transaction of credit card attract higher interest rate as high as 10%. Banks make it seem attractive to use credit card to spend. But it’s equally important to remember that the money should be repaid else you have to paid a high interest rate.

CIBIL score

CIBIL score is of great importance for individuals  Timely repayment of credit card debt will help you build a good credit score.

Minimum payment

Banks generally give 45 days interest free payment window to its customers. But after that you have to pay a minimum amount i.e. 5% of the total bill, otherwise you will be levied a higher interest rate on your spending.

Crossing the limit

There is a limit beyond which you cannot spend. Its depending on the credit card you use. However, spending beyond the credit card limit can invite a big amount penalty. The minimum over-limit fees charged is Rs 500 from where it can go up depending on how much you have crossed your limit.

Cash Handling Charge

One has the option to withdraw cash from an ATM using a credit card. If possible, never use your credit card to withdraw cash. This is because of the high cash handling fees. It generally depends upon the amount withdrawn. Interest charges ranging between 3 to 5% accrue immediately after the cash withdrawals using credit cards.