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Confused on which credit card to opt for? Here’s help on how to choose

There are at least 130 different types of credit cards in the market. Choose a card based on your spending behaviour

July 29, 2021 / 09:43 AM IST

It’s not easy choosing a credit card. Typically, we end up taking one from our bank because it just sounds convenient. But that is not always the best card for you. Here are some useful tips that you can consider, to help you choose the best credit card.

Discounts, benefits and rewards

Some cards offer good discounts at restaurants, others reverse fuel surcharges. A few other cards convert reward points to airline miles or simply offer the highest multiple on reward point conversion. Years ago, Citibank issued a credit card that offered its users the ability to convert reward points into hotel room bookings. Such features enhance the user experience and utility of the card.

Go for a card that matches your requirements. If you don’t travel much, then having a card that converts reward points into airline miles is of low benefit. Instead, a card that offers discounts on shopping and additional vouchers may be useful.


Cashbacks or rewards

Reward points are essentially like a bonus you get for using your credit card. They are based on your spending pattern. For example, the HDFC Infinia Credit card gives five reward points for every Rs 150 spent on the card.

Given that its regular rewards catalogue even has the latest smart phones on offer, collecting reward points on big-ticket purchases can be very beneficial. In contrast, Citibank Cashback card focuses on adding back to your savings pile by giving you limited cashback on every spend. For those who make several small-ticket purchases using their credit card, this one may be useful in adding back to your savings.

International benefits

There are cards that offer international airport lounge access at no additional cost, which frequent international travellers look forward to. While we know that an international credit card allows you to spend overseas as well, most people aren’t aware of the foreign currency exchange charges.

If you use your credit card overseas, your spend is converted into Indian rupees. Your credit card issuer charges a forex currency mark-up as fee for the transaction. This figure is typically 3 percent of the transaction value or higher. However, SBI Elite and HDFC Infinia advertise a lower charge of 2 percent for a transaction. If you frequently travel overseas and spend using your Indian credit card, you must lower the costs.

Enhanced features

These include insurance covers of various types and other features such as concierge services.

Certain credit cards give you unsolicited insurance worth a few lakh rupees for travel or health or overseas hospitalization or lost card and so on. You won’t get all of it in one card. You can pick a card that gives you the benefit relevant to your lifestyle. Concierge services can be used to book holidays, send special gifts or make dinner reservations in a new city. You may not want to base your choice only on these enhanced features, but being aware is just as important.

Pay your bills on time

All these additional benefits make credit cards seem lucrative. However, you should know a credit card due is essentially a loan. If you overdraw or don’t make the payment on time, the charges and interest costs are quite punishing. Hence, consider these additional benefits as the frills that can add to your positive experience of using a card and not really the main reason for you to take a credit card.
Lisa Barbora is a freelance writer. Views are personal.
first published: Jul 29, 2021 09:26 am
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