Are you looking for a credit card? The number and variety of cards can be mind-boggling. Cash back, reward points, airline miles, fuel surcharge waivers, discounts, reduced fees, lounge facilitiesâ¦ the list of card benefits and features is seemingly endless. This profusion of choices makes it difficult for a person to choose the best credit card. Here are some key points to help you choose the right card that suits your unique needs.
Match your usage
The first thing to remember is that no one card will suit all customers. It’s best to choose a card that matches your usage and spending habits. If you shop a lot online, go for credit cards that offer higher rewards for online transactions. Typically, Indian banks offer cards with a relatively more attractive rewards scheme. Some cards offer twice the reward points for online spending. Likewise, if your purchases tend to be category specific, a co-branded card may be a better choice. These co-branded cards provide additional benefits over purchases from targeted merchant organizations. Millennials will find these cards particularly beneficial.
If you spend a lot on fuel, get a card that waives the fuel surcharge and offers expense benefits at fuel outlets. There are also all-purpose cards that don’t limit benefits to a specific category and cover a wide range of expenses.
Likewise, purchasing airline tickets can be more rewarding with a co-branded airline card. For those seeking exclusivity, select a premium card that grants access to the airport’s luxury lounges. If you’re a “foodie,” there are plenty of “delicious” cards that save 15-20% on spending at over 2,000 restaurants.
Watch out for fees
There was a time when credit card companies offered free credit cards for life. Some issuers keep this offer attractive, but most cards now have membership fees and annual fees ranging from ??500 to ??5,000. Cards with high annual fees also offer higher reward points on card spending. In most cases, you get coupons worth equal to the annual fee. In others, the annual fee is reversed if you spend more than a specified threshold amount in a year.
Paying high fees on credit cards isn’t necessarily a bad thing, but only if you make the most of the card’s benefits. For example, paying a ??5,000 for a premium credit card can be worth it if you get perks like a lower foreign currency markup, cash back at duty free shops, free golf course or lounge access and special privileges for meals or discounts at the best restaurants. So if you use your credit cards frequently, go for a card with a higher annual fee. However, if you have more than one credit card, it is best to choose the ones with lower annual fees.
Card fees might not be a big deal if you don’t have too many cards, but the interest rate charged on the balance is definitely something the cardholder should take note of. The interest rate ranges from 1.5% to 3% per month. A card with a low interest rate is obviously a better option, but remember that if you keep a balance on your card, not only will you be paying a fortune in interest, but it will also hurt your credit score in the long run. term. This is why it is advisable to have at least two to three credit cards so that if it is impossible to repay the full amount, the balance can be transferred to another card or converted into easy-to-use monthly installments. a lower interest rate.
Transaction fees are levied on cash withdrawals and foreign currency expenses. Most credit cards in India charge the same fees for these transactions, so there isn’t much to choose from when it comes to this. But keep in mind that in most cases, getting a loan with a credit card can be cheaper than using your credit card to withdraw money from an ATM.
Additional cards for the family
Some customers are also looking for additional or additional cards for family members. Expenses incurred on these additional cards are billed to the primary card. If you are also looking for a card for your spouse or adult child, check if the card you have chosen offers such ease.
Raj Khosla is Managing Director of MyMoneyMantra.com
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