Smart ways to choose a credit cards that suits you

27 MAY, 2022

When it comes down to choosing a credit card, one is spoilt for choice. Once you meet the credit card eligibility criteria and submit the required documents, you anxiously await the arrival of your credit card. The excitement is higher, if it is your first credit card.

A credit card offers a lot of ease, convenience, and multiple benefits. Multiple issuers offer different cards, and it is advisable to do a little research before applying for one that best suits you. 

What can you pay attention to?

Before reaching the credit card eligibility stage, a little research from your end is key. If you are not too much of a traveller you don’t want to be stuck with a card offering air miles or lounge access benefits, now, do you?

There are multiple credit card products in the market, each having distinctive features, catering to varying needs. Cards offering air miles to travellers, premium cards, cash-back cards, low fee cards, cards that reward you for everyday spending, and other such benefits. Rather than getting baffled, list down factors that should be considered while shortlisting your credit card.  Here are a few:

Benefits for you as a Credit Cardholders

Credit cards across financial institutions are intended to meet the varying demands of their holders. These perks include cashback on shopping, travel points, discounts on movie tickets, dining incentives, hotel upgrades, and money back on fuel. You get to choose the kind of privilege you require. If you are a movie buff you should consider a card that gives free tickets or other theatre benefits.  If you travel a lot, then choose a card with airline tie-ups and hotel benefits. If you are a shopaholic focus on the reward point schemes. Based on your spending pattern and where your affinity lies, select a card.

Fees and credit card charges

Credit cards have quite a few fees associated with them. This could be an annual fee, processing fee, service tax, Smart EMI fee, late payment fee, GST, and more. Be clear about all these charges as they can add up to a significant amount if sprung upon you. Most credit cards have exemptions on these fees as well or conditions to be met, in which case they won’t be levied.

If you meet certain milestones, such as spending a certain amount your annual charges get waived off. Try and see if your current spending habits meet those goals. Don’t alter your spending to get these waivers.

Reward point redemption, offers, and programs

Some credit cards offer perks such as lounge access, hotel membership, dine-out cards, and other exclusive access. Get acquainted with these.  For each purchase you make be it while shopping, dining, travelling, or filling fuel, you earn reward points. Check out where these can be redeemed, the credit card company will have tie-ups. Alternatively, the reward points earnt could be higher for a particular category of spending, be sure to look into those to make the most of the credit card.

Credit Limit and credit card eligibility

Each card issued to you will have a credit limit. This will be determined as per your income and credit score. With time the limit increases if you pay your monthly bills on time.  An excellent credit score will determine your creditworthiness and chances of you getting a higher limit. Similarly, premium cards or cards with more benefits will have more stringent credit card eligibility criteria. Make sure you get a credit limit of which 30-40% credit usage is good enough for you.

Customer care and convenience

These days every issuer offers basic convenience like the option to pay credit card bills online or convert charges to EMI. Look for a credit card company that goes the extra mile for its customers. This could be in terms of responsiveness, grievance redressal, dispute resolution, safety, rigorous security, and authentication processes in place. The ease and care with which a credit card company addresses concerns like fraudulent transactions, lost or stolen cards, and other such unforeseen circumstances should be factored into your consideration set.

Credit card application and issuance

Once you have met the credit card eligibility, the application and disbursal process should be hassle-free. There should not be multiple follow-ups from your end or too much back and forth. Check out the reviews of credit cards as well to get a clear picture.

Get acquainted with certain technical terms

Finally, you need to know everything there is to know when it comes to a credit card. Terms such as credit limit, cash limit, due date, minimum amount due, Annual Percentage rate (APR)late payment fee, processing fee, finance charges, billing cycle, balance transfer, etc will appear on your statement. Be well versed with such technical terms to avoid confusion.

Be very clear about your financial standing and spending capacity. This is the first step towards responsible spending, you don’t want to max out your credit cards. Overspending can cause your credit card to take a hit. Picking a credit card that best suits your spending and repayment patterns is key since you will eventually have to repay everything you spend on the credit card!