Just like a coin, credit cards are twin faced. One face makes life simpler by doing away with cash and also provides benefits on spends and the second face is full of debts if the card is not used properly. Decision of applying for a credit card can be a huge step in itself for a lot of people.
However if the decision is made and you have moved in the direction of applying for a credit card, actually the decision making process has just begun. Credit cards have a world of their own which can lead to a lot of confusion with around 40 choices available for the user. Major banks out there offers multiple choices. So which one do you choose? Lets make this easy for you
5 things needs to be considered when you choose the card best suited to you:
Benefits and Features of Cards
Credit cards do not offer only reward points. The other benefits may include inbuilt protection against fraud, airport lounge access, insurance, privileges in golf and dining offers. If you travel frequently, you must prefer a card which offers lounge access additionally. If you are golf lover, choose one which allows entry to prominent golf clubs.
Pattern of Spending
Mostly credit cards are structured in a way that they promote spends of particular categories. Some may provide you benefits for purchases made through your card on ticket booking, bills payments etc. while other may incentivize shopping and travel spends. Make approximations of your card spends in each of the categories like bills payment, shopping, fuel etc. This spend pattern is beneficial to find which card will provide you with maximum rewards/cashbacks.
Charges and Fees
Everybody desires to get the maximum benefits in return for their spending. Paying annual fees for credit card is widely not regarded as a statement value for money. However, this is a common myth. Commonly called paid cards, they come with many added benefits, usually one time, which more than offsets the fees that you pay. The whole industry is trying to move away from cards that are free., as paid cards, in addition to providing revenue to the bank, gets only interested customers to apply. The amount that the user is willing to pay in fees may limit the choices.
Rate Of Interest
If you pay your credit card bill on time or before time (which is advisable), You may not bother about this. Rate of Interest is the amount the bank charges you for the money that you did not pay in the allocated time. Any further purchases that will lead to your amount of interest. Rate of Interest on credit cards are predictable and this would be beneficial for people who plan their dues.
Limit of Credit
The limit that has been assigned on the card plays a prominent role for most users. A card with high limit permits you to carry just one source for all your purchases without the issue of money being exhausted . The flip side is that it can lead to higher debts if any mishap such as theft/misuse comes into account.
While you cannot alter or influence the limit assigned by the bank, applying for more premium card would generally lead to a higher credit limit being assigned.