Credit cards are one of the best payment methods today. They are an effective tool to manage daily cash requirements and build a credit history for beginners. There are plenty of credit cards in the market and selecting one can become a difficult task. Today we will look at the key points to keep in mind while selecting or choosing a credit card.
1. How will you use the credit card?
This is a very important question. You need to determine for what purposes you will be using the credit card. If you are going to use it only for online shopping there is a specific category of cards available. In case you are a frequent flyer and travel a lot, there are specific cards which provide travel related benefits. If you socialize regularly, you can opt for cards which offer discounts on restaurants, multiplex tickets etc. If you want to use the credit card for daily use you can opt for mixed use cards.
2. Features offered by a credit card
It is important to know and understand the features which a credit card offers. Ideally a credit card should have the features of – Wifi enabled electronic chip cards, utility bill payment, EMI facility, cash withdrawal, worldwide or national acceptance and reward points program.
3. Annual renewal fees
Most credit cards charge an annual renewal fee ranging from Rs 499 to Rs 5,000 and beyond. The annual fees are waivered if a cardholder spends a certain amount every year. You need to decide how much money you are ready to spend for renewing your card yearly. There are also lifetime free credit cards. For starters, it is good to begin with a lifetime free card or a card with minimal renewal charges.
4. Other charges
It is important to be aware of other charges like cash withdrawal fees, late payment fees, finance charges (which is interest charged for using the revolving credit) before you select a credit card.
5. Reward Program
These days credit cards are loaded with lucrative reward programs on every spend you make on different categories such as shopping, dining, groceries, entertainment, travel, and others. These points can be redeemed against gift vouchers, merchandise, privileges etc. You should go through the reward program available on the credit card before selecting the card.
There is no ‘perfect credit card’. It all depends on how you want to use it and how much money you are willing to shell out to keep it. The above points can help in making an informed decision while choosing a credit card.
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