Advantages of Credit Card | Which credit card would be best for you? Know these important things before taking, which credit card would be best for you? Know these important things before taking
Know which credit card will be beneficial for you (pic-istock)
- Banks offer a variety of credit card variants.
- Before taking a credit card, one should read and understand even the smallest detail.
- There is no dearth of credit cards in the market with zero annual fees.
If you think that credit cards are just a payment tool, you may be wrong. Smart and disciplined use of credit cards can help you save more on your expenses. Plus using a credit card can improve your lifestyle experience for free if you pay your entire dues on time to avoid interest charges (typically in the range of 3-4% per month) and If you do not have to pay any membership fee for the card. To enjoy the benefits of a credit card, it is important that you choose a credit card that matches with your spending pattern and budget. So, if you are planning to get a credit card, here are some important things to keep in mind while comparing your options.
credit card eligibility
More than one credit card variant is offered by most of the banks in the country. However, you may not be eligible for all the credit cards available in the market. Some card variants require very high income and very high credit scores. Suffice it to say that you should always search and compare credit cards according to your eligibility and avoid applying for a card for which you are not eligible, so as to reduce your chances of getting rejected. and avoid unnecessary degradation in your credit score due to the thorough scrutiny that is done during the process.
Matching credit card benefits with your spending pattern
In addition, not all of the cards you qualify for may be the best fit to meet your needs. There are various key benefits associated with credit cards such as cashback, reward points, air miles etc. But you should ideally choose a card whose benefits – match your spending pattern. For example, if you don’t have a card and plan to use your card primarily for online shopping, you should choose a card that offers extra cashback or reward points for shopping online and not Fuel refills! Matching the card’s core benefits with the categories for which you spend frequently is very important to maximize your benefits. You must read and understand every little detail to get a complete clear idea about the benefit riders like cashback cap, reward point redemption option and conversion rate etc. and the actual value proposition that comes out of its benefits (real value proposition) so that you can make your selection even better.
Now, let’s say you’ve picked a few cards based on your preferred spending categories- but how to figure out which card would be best for you? You should choose an option that allows you to maximize the benefits of the card while maintaining your monthly budget for spending on the card. For example, if your monthly card spend budget is Rs 20,000/-, you should opt for a variant that offers 10% cashback on spends up to Rs 20,000/-. This will allow you to easily save Rs.2,000/- per month (or Rs.24,000/- per year) on your expenses. If any other card offers similar benefits but has a higher spending limit i.e. Rs 40,000/-, then according to your budget, you will not be able to maximize the benefits on the card. That is to say, you should not break your card spending budget just to maximize the benefits, but you should also see that you pay the total outstanding balance in the interest-free period with each billing cycle. can easily.
The limit associated with the credit card account is decided by the bank considering the applicant’s income and credit score inter alia. This means that depending on your income and credit score, different banks may give you different credit limits associated with the credit card. But you may prefer a card variant with a higher credit limit attached to it. This can help you keep your credit card utilization ratio below the 30% mark, which is considered very good for your credit card score. Note here that, a high credit limit does not mean that you spend beyond your budget. This gives you some convenience when spending a large amount, protects your credit score and increases your eligibility to apply for premium credit card variants in future.
annual fee on credit card
While there is no dearth of credit cards in the market with zero annual fee, sometimes they are just the basic variant with limited benefits. So, if you are looking for a premium credit card with enhanced benefits, you should go for a credit card whose annual fee does not impact your budget, and more importantly, the benefits associated with using it, Membership fees are more. In addition, many credit cards that charge annual fees come with annual spending goals—if you can meet those goals according to your budget, your annual fee is automatically waived during renewal. .
Additional Perks, Privileges and Perks
Most credit cards come with perks, privileges and perks that come with core benefits like cashback and reward points, and you should choose the card with which you get the most added benefits. These additional benefits include complimentary travel insurance, free lounge access, joining gifts, option to avail loan against your credit card, easy EMI facilities, special discounts when you shop from certain brands or specific e-commerce websites or This may include promotional offers, hotel bookings and special deals at select restaurants, depending on the variant of your card. Using a credit card can make your experience even better with these attractive perks. So don’t ignore them.
Lastly, it can be hard to find a credit card that has all these features – but, a card that massively encourages your major spending categories while staying within your budget and with many useful perks. And if privileges are offered, then that card can prove to be a good one. Ultimately you choose any variant, but make sure that you spend wisely and within your limits so that you can easily avoid interest charges and negative impact on your credit score.
(The author of this article is Adil Shetty, CEO, BankBazaar.com)
(Disclaimer: This information is being given on the basis of expert reports. Markets are subject to risks, so take your own advice before investing.) (This article is written for informational purposes only. should not be construed as financial or other advice)
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