Credit Card: Key factors to consider to choose the best credit card
25 November, 2024 | 13:10 IST
Choosing the top credit card can feel like navigating a maze, especially with so many options available. It’s prudent to do a thorough research and evaluate the features before selecting the best credit card as per your needs. You should take into account several factors like the credit limit, interest rate, annual fees, offers and reward points, among others before finalising a credit card. As many card issuers offer customised cards and co-branded credit cards you can also choose one for specific purposes like travel, shopping and dining out.
Let’s delve deep into the key factors you should take into account before picking the best credit card.
It’s very important to understand your requirements and spending patterns before using credit cards. This will assist you in choosing the best credit card for your needs and one that aligns with your lifestyle. Consider how you make use of your credit card. Do you travel, eat out or shop online frequently? Understanding this can assist you in selecting the top credit card that provides the best cashback or incentives in the respective category.
Understanding the fees associated with different credit cards is crucial for making an informed decision. Some cards might have higher annual fees but offer extensive rewards or benefits.
Annual fee: Some credit cards charge an annual fee, which can vary depending on the card issuer. To get the best credit card, look for something where the benefits outweigh the cost.
Interest rates: Check the annual percentage rate, or APR, for purchases and cash advances.
Foreign transaction fees: If you travel abroad frequently, choose a credit card that doesn’t charge additional fees for transactions outside India.
For a credit card in India, the benefits and rewards that accompany it are a major attraction for many consumers. These could be incentives for travel, cashback or savings on particular services or products.
Cashback: Receive a portion of your purchases as cashback. This is ideal if you prefer straightforward rewards. A few card issuers also allow redeeming reward points for cashbacks.
Travel rewards: Accumulate points that can be redeemed for flights, hotel stays or other travel-related expenses.
Discounts and offers: Some credit cards provide discounts on shopping, dining or entertainment.
Insurance: This could be an extra advantage that some credit cards offer. Seek out cards that provide purchase protection or trip insurance.
Loyalty programmes: Certain credit cards include built-in loyalty programmes that provide extra benefits and exclusive deals with specific retailers.
Milestone rewards: Many credit cards in India offer attractive milestone rewards to encourage cardholders to reach specific spending goals. These rewards can include flight and brand vouchers, complimentary memberships to travel platforms, e-vouchers for popular retailers, and bonus points that can be redeemed for flight tickets. Additionally, some cards offer travel credits and access to domestic airport lounges for achieving spending milestones. When selecting a credit card, it’s important to consider the milestone benefits available, such as travel vouchers, lounge access and other incentives, to make the most of it.
The ease of applying for a credit card can vary. Some card issuers offer simple online applications, while others may require more extensive documentation. You can also apply for a credit card in a 100% paperless process through digital platforms like Moneycontrol, which makes this process easier by displaying tailored credit card offers from top banks. Based on your credit profile, you can view these offers directly on your credit score dashboard, enabling you choose the most suitable credit card as per your needs.
Eligibility: Before applying for the credit card you are interested in, you need to ensure that you meet the eligibility criteria.
Application process: Choose credit cards that allow a straightforward and easy application process.
Approval time: Consider the average time taken by credit card issuers for approving a card. Some credit cards come with instant approval and minimal documentation.
Always read the terms and conditions carefully before applying for a credit card in India. The terms and conditions contain essential information about how the card works.
Grace period: Understand the grace period for paying off your balance without incurring interest.
Reward points redemption policy: Check the details on how to redeem rewards and if there are any limitations or expiry dates.
Interest rates: Check the Annual Percentage Rate (APR) for purchases and cash advances, as these can vary widely.
Annual fees: Look for cards with no annual fees or low annual fees if you’re a beginner.
Late payment charges: Be aware of penalties for late payments, which can increase your debt and harm your credit score.
Card replacement fees: Some issuers charge for replacing lost or stolen cards, so check the policy.
Credit limit: Review how your initial credit limit is set and the process for requesting increases.
Evaluate support and customer service
Your credit card experience can change greatly depending on the quality of customer support you receive. So, before you lay your hand on the best credit card, select an issuer with a reputation for being dependable and accommodating customer service.
Accessibility: Seek out a credit card issuer that provides easy and quick access to customer service representatives by phone, email or chat.
Support quality: Find out about reviews or referrals to learn about the quality of customer service provided.
Online tools: Ensure the issuer provides a user-friendly online platform for managing your account and resolving issues.
Keep an eye on your credit score
It is important to know your credit score to find out which credit cards you can apply for. Higher credit scores usually open doors to better card options with more favourable terms. Here are a few quick tips to maintain a healthy credit score:
Pay your bills on time: One of the ways to improve your credit score is by making on-time payments always.
Continue to use credit sparingly: Maintain a modest credit card balance in comparison to your credit limit.
Review your credit report: To make any corrections and to keep yourself updated on your credit situation, keep track of your credit report on a regular basis.
Overall, selecting the best credit card requires knowing your spending limits, weighing benefits and costs, and going through the terms and conditions in detail. Selecting the best credit card may look a bit tough due to a plethora of offers but with a little planning you can choose the most suitable card. While selecting a credit card your aim should be to maximise the benefits while avoiding any extra financial burden.
Summary
Choosing the best credit card can be tough with so many options available out there. From understanding your spending habits to comparing fees, rewards, and credit limits, there are several factors you need to consider to make sure you choose the right credit card for yourself.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.
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