Credit cards have become a popular and feasible method to make payments for goods and services. Choose the right credit card can help you improve your credit score if you spend judiciously and make the full payment before the due date. Credit cards also offer great discounts, cash-back, and reward points. You can buy costly items using credit cards and then pay in EMIs or equated monthly installments. You can also use credit cards in emergency situations when you need funds urgently. Credit cards also offer interest-free periods, and the interest-free period may go up to 45 days. It is useful for hassle-free transactions online and offline. Various kinds of credit cards are available to cater to the different needs of customers. One can select the credit card that is best suited to one’s spending habits and, accordingly, saves more on daily expenses through reward points, cash-back, discounts, offers, etc. So, how to choose the right credit card for you?
Check Your Credit
First, evaluate which credit card offers you might be eligible for by verifying your credit score. If your score is better, then you have greater chance of being approved for credit cards with better benefits. You can do a free credit score check at CreditMantri and also download a free credit report.
Determine Your Lifestyle
To reap the full benefits of a credit card, you have to choose the right credit card that synchronizes with your spending ways, lifestyle, and requirements. Many banks offer credit cards that are customized for various lifestyle needs. Choose a credit card that suits your lifestyle and offers you maximum rewards. For instance, if you are a frequent flyer, you can choose a co-branded online travel agency/airline credit card. This kind of card will make your travel seamless and more hassle-free, as it offers benefits, such as free lounge access at airports, priority boarding, etc. If you love to eat out, socialize regularly, and choose a card that offers a better dining experience, then you should opt for a card that provides greater rewards and discounts at restaurants. If you have a very basic lifestyle, then a cash-back or points card might be best suited for you. If you are a person who spends more on entertainment activities, such as movies and clubs, then an entertainment credit card would suit you more than the other categories.
Some credit cards and their features are as follows:
HDFC Diners Club Black
- HDFC Diners Club Black provides unlimited lounge access
- It provides six free golf games quarterly and up to Rs 15,000 in bonuses.
- If you are a high spender and your income is a minimum of Rs 21 lakh per annum, then you should consider this card.
Air India SBI Signature Card
- It offers eight domestic visits per year and Rs. 11,250 in bonuses.
- Consider this if you fly Air India.
ICICI Sapphiro Amex Card
- It provides four quarterly domestic lounge visits.
- Consider this card if you are not a high spender but enjoy hotel perks.
The Kotak Mahindra Essentia Platinum Card
- It is an awesome choice for individuals who want to earn cash back on grocery and online shopping.
- Potential cardholders will earn a rewards rate of 10% (10 saving points for each Rs. 100 spent; 1 point = Re 1).
- To get this high rate, the minimum transaction has to be Rs 1,500 and the limit on monthly points is 500 points across grocery and retail spending together.
How Much Are You Willing To Pay For Your Credit Card?
Check how much your credit card costs and compare the different charges among credit cards. The different charges among cards are:
- Annual fees: Most cards levy an annual fee, but waive it off if you show minimum spending.
- Late payment and over-limit fee: If you settle the amount due after the due date or spend more than your credit limit, the bank may charge you a late payment fee.
- Finance charges: When you carry your outstanding amount beyond your due date, banks will levy an interest rate for using revolving credit.
- Cash withdrawal fee: Using your credit card and withdrawing money from an ATM draws charges and interest.
You need to go through the other charges, such as GST, foreign currency mark-up fees, mobile alert charges, balance inquiry charges, and duplicate statement charges.
All cards have a monthly credit limit. The credit limit of an individual is decided based on income. Therefore, before taking a credit card for the first time, you must contact the bank’s or the financial institution’s representative and find out about the maximum credit limit that you can get according to your salary. If you plan to use your card broadly for travel, dining, and entertainment, you may want to choose one with higher credit limits. If you do not use your card frequently, then opt for one with lower credit limits.
Credit Card Rewards
There are three main types of rewards: miles, points, and cash-back. Based on the category, cards accrue rewards that can be used as statement credits (cash-back), reward points, or miles. Based on your interests or how you tend to spend, one of these three types of rewards may suit you best.
Consider The Credit Cards You Already Possess
If you already have a credit card or two and wish to get another one, you must choose a card that provides a different set of benefits than the ones you already own. For instance, if you have a credit card that comes with a high reward rate, it is wise to look for other features in your new card such as travel benefits or cashback. In this way, you will be able to make the most of various types of advantages. You can also consider opting for a different provider as you will have a better chance to procure limited-period offers specific to the provider on e-commerce portals.
When you choose a credit card, it should be a combination of all the things mentioned above. The right way to start your search is by listing your requirements, shortlisting cards, and then applying for the one for which your chances of approval are the highest.