How to choose the right credit card for yourself

In our daily life, we tend to use many payment methods and methods such as internet banking, UPI, debit cards, cash etc. But one payment method that, despite the plethora of benefits it offers, is often on the receiving end of negative reviews is a credit card.

Rather than understanding that it is entirely your usage and repayment behavior that anchors the role of credit cards in your life, we end up believing the biased opinions or rumors that demonize these otherwise super cheap payment and credit access modes.

And more often than not it is not choosing the right credit card that becomes the reason why they cannot maximize their benefits.

So how can one choose the right credit card from the wide range of credit card issuers and types of credit cards offered by them? Would you like to know?

Read on as we explain the key points to consider when choosing a credit card for yourself.


Also read: Does it make sense to go for ‘free’ EMIs?

1. Spending Habits

First and foremost, look at your spending habits when considering choosing a credit card. The analysis of your spending pattern includes the frequency of purchases or payments and the category in which you make more transactions. Knowing this will help you better understand your lifestyle and align it with the right credit card.

Wondering why this is important? This is because most credit cards tend to target specific types of transactions and user groups by offering higher reward points and other benefits for those transactions.

For instance, if you travel a lot, take a travel credit card as it offers higher benefits such as free access to lounges, hotel vouchers, air miles etc for travel related expenses such as hotel and airline bookings. Or if you often make online purchases, pay bills, etc., you can opt for a cashback or online reward-specific credit card.

So this way you would take the first step by: know the category of credit cards that suits your spending habits and offers maximum benefits according to your lifestyle.

Also read: 4 reasons for millennials to say yes to a credit line increase

How to choose the right credit card?

2. Participation Bonus and Welcome Benefits

The next step is to compare the participation bonuses and welcome benefits of credit cards that fall into your chosen category. Today, almost all credit card issuers offer this added incentive in the form of entry bonuses and welcome benefits on their credit cards, which is an incentive to choose that card over the one that offers no or fewer entry benefits.

These welcome benefits may take the form of additional reward points upon participation, vouchers or coupons, etc.

While some such benefits may be offered when activating the card, some may come with certain conditions, such as only paying a certain amount in the first few days or paying the card price within a certain period of time.

Also read: Things That Affect Millennials’ Credit Score They Don’t Even Know About

3. Financing costs

Check charges and surcharges on credit card

You may be wondering why you compare credit card financing costs before zeroing a card?

Yes, we know that there will only be a financing charge on the outstanding dues if you fail to pay the credit card bill in full on time and in full, and these charges may not seem to matter to someone who is a disciplined user, yet it is better not to turn a blind eye to these accusations.

It is like that because, not only are these costs hefty in nature, hovering around 40% per year for most cards, but also because life is uncertain. Even if you have always shown disciplined behavior towards credit cards and plan to do the same in the future, the financial necessities of life may one day put you in adverse circumstances where you may find it difficult to repay the dues on time and in full.

With this in mind, you should consider the financing fees charged by various credit card issuers before zeroing out a credit card. If a card has similar features and benefits, but lower borrowing costs, it may prove a better move to opt for that card over the one that charges higher borrowing costs.

Also read: Why do millennials fall into the credit card debt trap?

4. Annual Fees and Other Expenses

Most credit cards have an affiliation and/or annual fee, which varies from card to card and issuer to issuer. Usually, the premium cards that offer a higher and wider range of benefits also entail higher annual and/or entry fees. But regardless of the category and credit card you plan to choose, it is necessary to compare such charges before finalizing a card.

However, many credit card issuers tend to waive or reverse the annual/entry fee when the credit card user exceeds the threshold in a certain period of time, usually the previous year of the card membership. So don’t forget to also check this aspect when comparing the rates of different cards.

In addition, there are several other fees and charges that credit cards incur, depending on the type of transaction. For example, if you go over your credit limit, you will be charged over the limit, while withdrawing cash from a credit card will incur both out-of-pocket costs and financing costs. costs on unpaid amount etc.

The whole purpose of comparing these costs is to ensure that the cost savings through cashback, discounts, rewards points, etc., outweigh the mandatory fees and other charges levied. After all, it makes no sense to choose a card that offers hardly any savings on transaction costs and also entails a high annual/joint fee and other costs.

Also read: How Secured Credit Cards Can Help You Enter the World of Credit Score

5. Reward Points Program

Compare credit card rewards points program

Rewards points are one of the key benefits credit card issuers emphasize when using their credit cards to target consumers. After all, the reward points you can accumulate on your spend and the redemption benefits you get for those reward points accumulated are the two aspects that anchor the reward points program of credit card issuers.

That’s why it’s important to compare these two aspects of different credit cards before getting into it. Reward redemption programs vary between cards and issuers, but typically include: benefits such as converting loyalty points into gift cards, air miles, purchasing specific products or using services at selected points of sale and/or online partners, or even adjusting points to open credit card accounts.

In addition, most cards’ reward points expire within 2-3 years, while few card issuers offer credit cards whose reward points do not expire. So it is wise to also compare this aspect when choosing the right credit card for yourself, so that you do not miss out on redemption benefits.

Also read: Easy Money Saving Habits for Millennials to Grow Their Wealth

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