During the prolonged lockdown, everybody is strapped for cash. If you are thinking to apply for a new credit card instead, it might be a good or an equally bad strategy. Therefore, here are

5 things that you must keep in mind before you apply for a new credit card amid COVID-19

Many small businesses are suffering extensive revenue losses due to COVID-19. A lack of manpower has increased the demand for credit not only in the UAE but across the globe. People around the world are compelled to apply for new credit lines to compensate for the lack of capital. But before you try to do the same, here are some suggested ways to keep in mind…

apply for a new credit card

  • Think about whether this is the right time to apply for a new credit card:

     Financial experts and economists believe that credit cards are suitable options to help individuals and companies counter the effects of revenue loss. An important point that you must keep in mind is that you are required to pay back the entire amount to the bank or financial institution at the end of each month. If you cannot do so, you are liable to pay interest on the outstanding amount. So, before you apply for that credit card, keep in mind your financial capabilities and potential to pay that amount every month

  • Calculate your urgency:

    Apply for a new credit card only if you are in very urgent need of money. Go for a 0%  credit card offfers to save a lot of money on the rate of interest. If you have a good credit history and credit score, it is a good idea to opt for such cards to counter financial instability and the lack of funds. These cards can go pretty easy on your pocket while fulfilling their purpose efficiently

  • Monthly expenses:

    Cardholders must try to reduce their emergency expenses and avoid the increasing amount of debt in the form of the principal amount, along with the interest that is added to it. Amid the coronavirus pandemic, customers must ensure that they do not engage in unnecessary spending and save money for essential supplies like food, rent and other personal emergency items

  • Existing credit card bills:

    Before you decide to go ahead and get another credit card for yourself, make sure that you have paid off all the debt that has been listed in your credit report. If you have not done so, you are opening yourself up to a potentially damaging interest rate that increases your outstanding amount and overall debt to the bank. It is a smart move to make sure that you are not adding to your debt and instead, reducing it by opening a new credit line

  • Replacing lost income:

    Even if getting a new credit card seems like a viable option for you, try to expand your income by taking up online ventures. Exploring the internet to look for ways to earn money while sitting at home can go a long way to replace the income that you have lost during the quarantine. Freelancing jobs, part-time online courses and marketable skill improvement can increase your employability in the future

You must keep these tips in mind so that you do not open yourself up to exposure after you apply for a new credit card. Also, keep in mind that applying for new credit lines when you cannot afford your existing credit can lower your credit score. Think about the big picture and don’t let your credit score get affected easily. Good luck!