How to Get a Credit Card as a Young Professional

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Get a Credit Card as a Young Professional

Credit cards have become a need for a vast portion of society, from paying Netflix membership fees to monthly shopping expenditures. Credit cards facilitate payments, provide several offers and discounts, and allow you to avoid carrying cash everywhere without worry, among a slew of other advantages.

However, people frequently overlook fundamentals such as paying bills on time, not understanding how interest is calculated, and so on.

So, if you’re thinking about taking a cashless trip with your credit card, this article is for you.

What is a credit card

A credit card is a payment card that allows you to pay for goods or services or borrow money for a set length of time up to a set limit if you commit to repay the money within the agreed-upon time frame.

Simply put, you can pay for your restaurant bills, subscription fees, and shopping charges with a credit card, and the bank will cover all of them. You must repay the bank after a set period of time, usually one month.

There are two crucial points to know here: you will only be able to pay using credit cards up to a certain amount, and you will be charged interest and late fees if you do not repay the bank within the specified time frame.

Difference between a credit and a debit card

Let’s pretend you’re going to bake a cake. You get flour out of the pantry, only to discover that you don’t have enough eggs. So you borrow some from your next-door neighbor, promising to repay him the next day.

Taking flour from your own cupboard is the equivalent of using a debit card, whereas borrowing flour from a neighbor is the equivalent of using a credit card.

You pay with a debit card from your bank account balance, whereas you borrow money from the bank to pay for anything with a credit card. You must repay the bank for the credit card at the end of the specified time period. Debit cards, on the other hand, do not require any repayments because the funds are withdrawn directly from your bank account.

Types of credit cards

General-purpose credit cards and private label credit cards are two types of credit cards. General-purpose cards can be used at shopping malls, restaurants, e-commerce platforms, and ATM booths to withdraw up to 50% of your limit.

Private label cards, on the other hand, are only accepted by select retailers. To diversify the benefits and services depending on income or repayment eligibility conditions, general-purpose cards are further classified as platinum, gold, classic, and so on. The transaction procedure is facilitated by credit card associations such as VISA, Master Card, JCB, and AMEX.

Other credit cards are also available. Employees of banks’ corporate customers receive corporate credit cards. For international use, foreign and dual currency cards are issued. Supplementary credit cards are cards that are issued in addition to the primary card.

You can, for example, apply for a supplemental card for your spouse at the same time as you apply for the main card. You can use it anyway you like, but the entire sum will be billed to the principal cardholder.

How to apply for a credit card

A credit card can be applied for by any Bangladeshi citizen or resident over the age of 18 who has a valid e-TIN and significant and independent financial capabilities.

Non-residents and foreign nationals can apply for credit cards, along with the necessary documentation and processes.

Required documents to apply for a credit card

Mandatory for everyone: Signed and completed application form, copy of NID, e-TIN certificate, Passport size photos (signed by the applicant) of the applicant, the nominee, and the supplementary applicant if any, bank statement

For salaried executives: Copy of employee ID/business card, recent payslip/salary certificate

For self-employed: Trade license, bank statement of the company, partnership deed/certificate of incorporation and MoA, copy of a business card

For professionals: Professional certificate and business card

Further documents like FDR receipt, authorisation of encashment of securities, letter of lien, fundholding instructions are required for secured credit cards. The required documents may change from bank to bank depending on the profession.

After you submit all the required documents, the bank determines whether the applicant is eligible for a credit card. If the applicant qualifies for the card, a credit card is issued with validity not exceeding 5 years from the date of insurance/renewal.

A maximum limit and information regarding billing dates are also informed to the applicant. The maximum limit for credit cards is 25 lacs in Bangladesh, out of which a maximum of 10 lacs can be unsecured and a maximum of 20 lacs can be secured.

The limit and benefits depend on the financial ability of the applicant and the type of card.

Payment process and late payments

At the conclusion of each month, all cardholders receive a statement of accounts containing the amount of the bill due. The cardholder will have a minimum of 14 days to pay.

If you don’t, you’ll be charged interest and late fees. Even if a person only pays the minimal amount required, he or she will still be charged interest on the remaining balance.

If you don’t pay the minimal amount due, your account will be marked as overdue, and the bank will report your account to the credit bureau (CIB).

How interest on credit card is calculated

In Bangladesh, the highest credit card interest rate is 20%, and the interest is calculated on a daily basis.

This means that if you owe 1 lac takas, the amount due tomorrow will be 100,000 + (100,000*.2/365) or 100,055 takas, with interest calculated on the next day on the 100,055 takas.

One thing to keep in mind is that interest on cash withdrawals from ATMs is computed from the day of the withdrawal. This implies that if you withdraw money from an ATM on the first day of the month, the amount will be compounded daily for the next 30 days before you receive a bill.

Final words 

There is no doubt that credit cards make our lives easier and more comfortable, but if you are to get a credit card, don’t just pay the minimum amount due, be wary of the payment dates, and most importantly don’t withdraw cash unless it is absolutely necessary.

More: Rethinking workplace gender equality


Saizul Amin

From The Daily Star


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