You may be receiving many “Free Credit Card” offers in your SMS and email inbox. But what exactly is a free Credit Card? It may be a concept unclear to some.
The bank charges a cardholder an Annual Maintenance Charge (AMC) for a regular Credit Card. Think of it as a part of the card’s “cost of ownership”.
In the case of a free Credit Card, the bank does not charge the cardholder with AMC. This makes its ownership free to a certain extent.
Overall, since the card does not pull extra money from a cardholder’s pocket, it has quickly risen in popularity.
This blog offers an essential checklist to follow before adopting a free Credit Card. Consider it to make a sound and secure financial commitment.
- Duration of free usage:
Most promotional messages and emails for free Credit Card offers focus solely on the idea of “free”. It may not explain its inclusion in detail. One important detail to watch out for is the duration of free Credit Card usage.
Some free Credit Card apply offers extend only to the first year, while others are free for a lifetime. Ideally, the longer the duration of free usage, the better. This is because it keeps the card ownership cost low while still giving you the full benefits.
- Free usage criteria:
Some banks have criteria associated with the free Credit Card offer. In some cases, the bank will require a minimum annual spend through the card to enjoy no AMC benefit. The minimum annual spend amount differs for each bank and Credit Card option.
The free usage criteria is mentioned in the terms and conditions section of a Credit Card. Log on to the bank’s website or mobile banking app to check this. Alternatively, contact a customer representative to find out about this.
- International usage option:
International usage option refers to whether you can use the Credit Card for international online transactions or ATM withdrawals in foreign countries. It is a significant advantage in the modern-day global citizen era.
Hence, check on this with the bank you plan for free Credit Card apply. Some banks offer a free Credit Card limited to domestic use. On the other hand, some banks provide a globally accepted free Credit Card.
- Other applicable charges:
Typically, a free Credit Card offer includes a waiver of just the card’s AMC. A few banks also offer to waive the joining fee that you need to pay upfront at the time of card application. However, this is not all; the other charges also apply to the card.
Some other applicable charges are: ATW withdrawal fee, cash advance fee, over-limit fee, foreign transaction charge, and more. You need to pay for these along with the associated taxes; hence, make note of them.
- Authenticity of the free Credit Card offer:
Banks most commonly extend an offer for free Credit Cards via call, SMS, and email. However, given the rise of financial fraud, checking the authenticity of the free offer is important. Do not click on the offer or provide any details unless authenticity is established.
To verify the authenticity of a Credit Card offer, check if the communication comes from official bank channels. Check that the Credit Card application form is on the bank’s website/ banking app, and not on any third-party platform. Contact the bank’s customer service for doubts or queries.
Note:
While a free Credit Card provides you with instant and cost-free access to the card, make sure you use it responsibly.
Use the card mindfully, keeping your repayment capacity in mind. Use an EMI calculator to effectively plan repayment. This keeps your stress free and your credit score on track.
Summing It Up:
A free Credit Card is one where the bank does not charge an Annual Maintenance fee. You can access the Credit Card free of cost for a limited period or a lifetime. This makes a difference to the card’s cost of ownership you bear while allowing you to enjoy its maximum benefits. While innumerable free Credit Cards are available to you today, considering whether an offer is worth it or not is a judgment that you need to make.
