Financial Blog

How to Choose the Right Credit Card for you?

posted on 2019-11-27 08:10:06 by Admin

How to Choose the Right Credit Card for you?

Every Bank out there has a card tailored just for your needs. The card benefits look amazing at the outset and the sales person has you sold on the attractive terms, but is it the right one for you? If the process looks tedious and the jargons, daunting- fear not, We have you covered. Read on to know how to select the right credit card.

Understand your needs

First things first, start by understanding your needs and requirements. How does your spending occur? Are you an online shopper or do you prefer visiting the brick and mortar store? Credit cards are a boon for the online shopper for the ease with which they allow you to make the payments. You can of course opt for other modes of payment, but then credit cards do have certain extra incentives like cash backs, easy EMI’s etc to make life simpler for you.

Are you a frequent shopper, a frequent flier or someone who loves those long midnight cross country drives? Do you socialize frequently, does food get you going?

These are some of the questions you could ask yourself. There is a card for every one of those needs listed above and many more. But there are other things to consider too. Now that we understand our needs, you would need to look at the kind of cards available and their upside and downside.

Cobranded cards

Most of the Big brands in retail, travel, gourmet etc have a cobranded card with one of the banking partners. For example there is the Snapdeal HDFC card, Yatra SBI credit card, First Citizen Citibank Card, Indian Oil Citibank card etc. The major benefit of holding a Co branded card is that if you are a loyal and frequent user of the said brand, for example- frequent user of Snapdeal and hold the HDFC Snapdeal cobranded card, then you get to earn amazing rewards for every rupee spent on the brand store/ portal. On the other hand, using the card for purchases at other outlets gets you close to none or a pittance of the rewards you would otherwise earn on a normal card.

Thereby, a great option to go for if you plan to spend most of your bucks on the partner brand and not so good if you are looking for a card which gives you value for your money wherever you choose to use the credit card.

Speciality Credit Cards

There are some cards tailored to specific needs like Women Centric cards, Student focused cards etc. These work great if you fall into those specific categories, but would also be required that you keep a close eye on the terms and charges of the card.

Kinds of charges on your credit card

There are certain charges linked to owning a credit card. Lets break down some of the important ones for you to make an informed choice.

Annual Fees:

Most cards charge an annual fee on the card. Some do waive it off for the first year and start charging from the second year on and so on. Some cards waive off the charge on reaching a minimum threshold of purchase in the year. It would be best to look at these terms closely, so that you don’t end up paying unnecessarily.

Finance charges:

It’s always best to pay off your cards in full every month. This way, the vicious circle of revolving debt doesn’t get to you. But if due to any unforeseen circumstances, you do use revolving credit, be aware of the charges associated with the same. Its sometimes as high as 42%

Cash Withdrawal fee:

Your credit card allows you to withdraw a certain amount as cash. But this withdrawal attracts a huge charge and interest.

Late payment fee:

If you happen to miss your due date or settle your debt after the due date, you could be attracting a late payment fee.

If used wisely, a credit card can be the easiest payment options with interest free credit, amazing reward options and freedom from cash in this digital era.