Renowned American jazz pianist, Willie “The Lion” Smith, once said, “ROMANCE without FINANCE is no good”. 

Compatibility between romance and finance is akin to the compatibility between the heart and the brain. While the heart may run wild and wants the best, the brain needs to step in to make wise decisions. If the decisions of the heart may be made based on reel-life fantasy, it’s the brain that does the real-life processing to reach beneficial conclusions.

In the first of our 3-part Valentine’s Day series – #MattersOfHeartAndWallet, we tackle financial compatibility. 

When it comes to our significant others, romantic gestures often overpower financial constraints. We often consider it alright to extend the budget a little when expressing our love. Alas! If only being romantic did not cost a fortune. It does not take long for matters of the heart to become the prime reason for the worries of the wallet. 

Romantic and financial compatibility is equally essential, raising important questions that need to be asked to maintain a balance between the two. Let’s take a deeper dive into the interplay between these two concepts:

Is There an Equal Financial Contribution?

Of course, we’re well past the culturally male-dominated days where only one partner – the husband – generated income in the household, with the couple’s immense love for each other being sufficient to spend the rest of the life

With evolving cultures, economic progress, and inflation on the rise, priorities have significantly changed. Financial security has become essential to continue living happily. In today’s time, rather than the “head over heels” sentiment, perhaps financial soundness sustains love between people more. 

A major factor behind arguments between couples is their finances. A lack of money and ever-increasing debts can lead to sustained stress between partners. At times, issues escalate to a greater extent, where relationship strife turns into reasons for divorce. A financially stable person far outweighs a broke selfless person when it comes to choosing a life partner. 

Are Your Spending Styles Compatible?

Is one of you a spendthrift while the other a miser? It doesn’t have to be that extreme, but the point is – is there a considerable gap between how you and your partner spend money? Some believe in extravagance, after all, what’s the point of earning money in the first place?

Others prefer to only spend on ‘value’, and save for a rainy day. 

There’s nothing inherently wrong or right with either approach. What is critical is ensuring there’s a minimal gap between both your styles. The further apart you are on this spectrum, the higher the chances of issues cropping up, since this would be an aspect you’d perceive on a daily basis.

Do You Discuss Monetary Contributions With Each Other?

Believe it or not, romance does flourish when each partner pulls their own weight. If you do not discuss contributions and finances with your partner, it may sprout seeds of resentment and disdain in your relationship. It is essential to be open in your discussions about money whether it is regarding saving it, spending it, earning it or investing it. 

Even if one of the partners is not earning, it doesn’t mean that you should not have money discussions. The one who stays at home makes a greater contribution than the one who goes out to earn. Budgeting is the crux of many issues. Hence, participation and awareness of all parties are essential. 
Couples who tend to hold open conversations about money have few to no incidents of hidden purchases. They become equally adept at planning and managing their finances. 

Are You Wise In Using Credit? 

Another crucial aspect to keep in mind is the use of credit. Credit and credit scores play an important part in day-to-day expenses. Credit can be hard to source if your partner has a poor credit score despite yours being considerably high. Simply gaining an understanding of the credit score of both yourself and your partner can help you tackle future credit urgencies. In other words, financially aligned couples tend to have easy access to affordable credit. 
Discuss and align bill payments, credit card repayments and other such things which can impact your ability to apply for credit with banks and other financial institutions. 
This potential issue, fortunately, is being addressed well with the rise of instant loan apps like EarlySalary, which offer quick personal loans right from your smartphone, and don’t rely solely on credit scores for assessing borrower credibility.

Conclusion 

You can certainly enjoy romance while staying in financial sync with your partner. On a lighter note, perhaps a bottle of fine wine can be enjoyed while you finalize your budget? Are the best kind of dates the ones where you tackle taxes with your better half?

In the next post in this series, we’ll take a closer look at what it means for your partner to be a freeloader and its implications on your relationship.

While getting too friendly with credit cards is one of the credit card mistakes to avoid, you need to be diligent during the application process too. While applying for a credit card is a relatively easy process, you may tend to make some common mistakes while you are at it. 

These mistakes have consequences – ranging from a flat-out denial of your application to potentially costly penalties in the future. So, read on to learn some essential things to know before getting credit cards.

5 Mistakes to Avoid When Applying for Credit Cards

Too Many Applications Over a Short Period

Are you leaning towards playing the numbers game when you apply for credit cards? Statistically, you’d think submitting multiple applications would increase the probability of getting approved. But credit cards are a different ball game. 

Simply applying for as many cards as you can doesn’t mean you have a higher chance of getting approval. Your credit score may take a hit when you apply for a credit card since the issuer will conduct an inquiry. 

Applying for multiple cards makes you look like a reckless borrower, deterring the issuer from approving your applications. As such, you must wait six months between credit card applications to avoid hurting your credit score.

Not Doing Due Research

There are several credit card options and issuers that you can choose from. Without comparing these options, you may end up with a credit card that may not suit your needs. It is vital that you apply for cards that actually align with your spending habits. 

You have to know how you will use the credit card – what will you pay for? Do you foresee any big purchases or considerable expenditures each month? If so, you will need a card with a high credit limit. 

If you are a frequent shopper, getting a credit card that offers discounts and cashback across online and offline retailers is better. So, ensure you do your research before applying.

Not Understanding the Terms and Conditions

This might seem a silly thing to overlook, but it is, in fact, one that is quite common. Do not choose a credit card based on the company’s reputation or initial offerings alone. 

Dive deeper into the provisions, terms and conditions, repayment plans and other costs associated with the credit card you are considering. This will give you valuable information like interest rates, annual fees and reward structures. 

If you travel a lot, you will be better off with credit cards that offer travel insurance and no fees for international transactions. If you eat out often, you can check out cards that offer high returns and rewards for dining expenditures. 

Choose a credit card once you know exactly what features and advantages it offers. Understanding the costs will also help you choose a card where you can keep the expenses manageable while maximising the perks.

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Applying Before Paying Off Existing Debt

One of the crucial things to know before getting credit cards is that you must not apply for them if you have substantial obligations. While considering your application, issuers will check your credit report for your debt-to-credit ratio. 

This ratio heavily impacts your credit score. The more debt you have, the lower your score. For a favourable evaluation, you must pay off your existing debt before you apply. Even if you cannot pay off all your debt, pay as much as you can before you apply for another card. Always remember that your credit score is a major factor that affects the approval of your credit card application.

Applying to Access Inexpensive Credit

If your primary objective behind obtaining a credit card is simply to access short-term funds or loans, you’re shopping at the wrong place. Credit card interest rates can be prohibitively expensive, often as high as 42% per annum. 

Thus, they are more suitable for quick access to credit for the very short term, during which you can arrange for funds to pay the monthly bill. Remember – applying for or acquiring the wrong credit card can prove detrimental to your finances over the long term. 

Take your time and research before applying for a card and you stand to benefit in multiple ways – such as better credit scores, increased spending ability and reward points and other benefits.

Now that you know the credit card mistakes to avoid, plan your application and usage smartly. If you want a card that comes with a simple online application process and multiple perks, consider the Fibe Axis Bank Credit Card. 

This card offers benefits like up to 3% cashback on every transaction, discounts on dining with partner restaurants, fuel surcharge waivers, and much more. It is also a UPI-linked card, allowing you to make convenient payments without any hassles. To apply, download the Fibe Instant Loan App or register on our website today!

FAQs on Credit Card Mistakes to Avoid While Applying

What to avoid when choosing a credit card?

Common credit card mistakes to avoid when choosing one include:

• Not assessing your finances and spending habits
• Neglecting to check the associated fees and charges
• Not researching the options

What is the biggest mistake you can make when using a credit card?

A significant mistake when using credit cards is not paying bills on time. Non-repayment can lead to the accumulation of interest charges, which increases your liabilities. What’s more, a missed payment also results in a late payment charge. 

Can I cancel a credit card right after applying?

Yes, you can cancel a credit card application up to the time that the lender has not reviewed your application. 

What if I made a mistake on my credit card application?

Financial institutions can reject your credit card application if you make a major mistake while filling out the form. Therefore, be careful when you are filling in the information.

They say the concept of credit is as old as humanity itself; coming into existence even before the concept of money did. The concept of formal credit, however, is a little more recent. On the occasion of the Indian Republic turning 71, we trace the history of the Indian credit sector, and see how it has evolved into what it is today.

Early India

According to several early texts, money lending has been around in India since the Vedic period. However, the first texts to mention a systematic lending system were Kautilya’s texts of the Mauryan age. The scriptures mention loan deeds prevalent during the period. Later, during the same period, an instrument called adesha is mentioned, which was quite close in its application to the modern bill of exchange. During this period, merchants are also recorded as giving letters of credit to each other. In addition to these instruments, there is evidence of the use of barattes, which were payment orders by the royal treasuries, and Hundis, which had varied functions in different situations.

Pre-Independence

While there is evidence of systematic credit systems during the various periods in early Indian history, things changed completely when the British came into the picture. The formal banking system came with the colonisers. The first bank that came up under the British rule was the Union Bank of Calcutta, and several banks including Allahabad Bank and Punjab National Bank. 

During the 20^th century, the Indians started opening their own small banks to serve particular communities. Several banks were formed between 1906 and 1911 as part of the Swadeshi movement, including Bank of India, South Indian Bank, Bank of Baroda, etc. The Swadeshi movement also inspired the establishment of private banks in Dakshina Kannada and the Udupi district. All this served well to formalise the credit sector in India. But the major event that cemented our banking systems was the establishment of the RBI in 1935 to regulate lending throughout the nation. 

Post-Independence

The banking system before independence had been, for the most part, privately owned. When India finally gained her independence in 1947, however, the partition affected the economy adversely, especially that of Punjab and West Bengal. The newly formed government quickly sought to strengthen the economy by actively involving itself in the country’s economic affairs. One of the biggest steps towards the same was the establishment of the Banking Regulation Act, 1949, which empowered the RBI to regulate and control the Indian banks. Before the Act, RBI had few powers over our banking system. Most banks at that time were nationalized and highly rule-oriented. For a while after independence, the Indian public had quite a difficult time getting loans for any purpose.

Modern Lending Systems

The 1990s saw a paradigm shift in economic matters throughout the world. Globalisation and liberalisation caused India, too, to relax some of its rules. As our nation opened itself to the global economy, new private banks such as HDFC, ICICI and IndusInd were established. Lending and borrowing became faster and more efficient than before. However, getting a loan sanctioned was still a tedious task at that time. It would involve several trips to the bank, rushing around for copies of documents and hefty collaterals against the loans. 

The sector is currently undergoing another paradigm shift, one as significant as that which was caused by the globalisation movement. The use and high prevalence of new technology is gradually making the process of lending and borrowing much simpler than it was before. Cryptocurrencies, blockchain and artificial intelligence are technologies which have contributed to this shift, but much more popular than all these sophisticated technologies, is the attractive prospect of getting a loan while sitting at home through instant loan apps. The advent of such services has been well timed, while the nation is seeing rapid growth in credit like consumer durable loans, which grew the fastest as recently as 2018.

The need for credit from the average Indian is visible across different metrics. Take credit cards. While debit card transactions doubled between FY 13-18, credit card transactions leaped ahead by a whopping 5 times. Apps like Fibe are gaining immensely in now, precisely because they have made it simpler than ever before to borrow. 

Where several trips to the bank were once necessary in order to secure even a small loan, instant loan apps have made it possible to get personal loans with quick approval, effortlessly from the comfort of home. EarlySalary, which is one such app, offers personal loans of up to ₹ 2 lakhs made available instantly. Other loans offered include travel loans, shopping loans and education loans of up to ₹ 5 lakhs. 

While there are many players in the instant loan sector, Fibe alone crossed the million customers mark recently. Clearly, the credit sector in India has evolved from a fairly informal system based on trust and few documents in Early India, to a rigid system with several rules governing it post-independence, to the quicker, more efficient digital system of modern times.