With so many types of credit card rolled out for meeting different customer needs, it needs a diligent effort on your part to decide on which suits you best. Here are listed some of the major parameters you can consider while choosing the best card for you:
Consider your financials and Lifestyle
Your spending pattern and lifestyle plays a key role in choosing the best card as corresponding to those spending habits you can scout out for a suitable card with different offers, discounts and reward points. If you are a frequent shopper, select a card thatprovides you with discount on shopping at select stores of your choice. If you happen to be a globetrotter, choose from among the super-luxury cards which offer free air miles. So suiting your utility pattern, you can decide for the credit card.
Interest ratevary for different credit cards offered by the same bank. Usually the interest rate on credit card is between 20-48% and depends on factors such as card spending pattern, credit utilization and repayment.
Check your debt utilization and then decide on your Credit card limit
It is suggested that credit card limit should be on the higher side and consumer should use 10-30% of his card limit. So, you will be in a better position if your debt to limit ratio is less. This ratio is calculated by dividing your total spending on the card by the credit card limit. This can be better understood with an example: If you have a card with Rs. 3 lakh limit and you spend 50000 using it, your debt to limit ratio will be 16%. In doing so, you will be considered as a responsible credit card user and your credit score shall also not be affected.
Fees and Other charges
Though there are few of the cards with no joining and annual fees, some others come at a cost, so it shall be wise to consider this aspect as well. Annual fees is levied by some issuers from the second year onwards and waived off in the first year. Further, in case you spend above some preset limit then also you don't need to pay the annual fees. Some of the cards come with Life Time Free option with no annual fee charges.
Joining fees as high as Rs. 1 lakh is payable on super premium and premium credit cards. These in most instances are offered by invitations.
Some other charges also apply on credit cards such as late payment charges, cash advance transaction charges, overlimit charges, card replacement and other charges.These are pegged at either 1-2.5% of the amount in transaction or a flat sum of Rs. 50- Rs. 750.
Reward Points, Discounts and Offers:
Now, check on for the benefits other than the available credit limit with the credit card. Seek for the extent of reward points offered in lieu of your purchases both online as well as offline. Also, look for the ways to redeem such earned reward points. Redemption can be provided in either of the ways such as conversion of point earned into free air miles, bill payment, gift vouchers, direct credit of the amount into your account. Compare the value of reward against the amount spent on the cards.
It is another important feature as with higher limits on credit cards they are exposed to higher risk of fraud. Banks have done their part and made them chip enabled to reduce such threat. In online transactions, OTP or VISA and Mastercard secure codes are used for authentication.