5 Things to Keep In Mind While Choosing a Credit Card

by Nisha Scott Account manager

The credit card is no longer just a basic payment tool that you use instead of cash. Modern credit cards have so many features and perks that they may end up helping you save up on your expenses and allow you to build a healthy credit score. If used correctly and with discipline, a credit card can actually be very beneficial to you, especially if you also pay your credit card bills on time.

Having said that, there are many types of credit cards available today, and it is also important to choose the right one based on your specific requirements. Every credit card is designed for a particular type of individual based on their income and expenditure pattern. If you do not choose the right credit card, you may be losing out on the card’s benefits.

Let us look at 5 things to keep in mind when choosing a credit card.

Ensure that the card is suited to your needs

There are many credit cards available on the market. These are Fuel Saver cards, Shopping Credit Cards, Travel Credit Cards, Rewards Credit cards etc. Each of these have benefits related to the type of expenditure. For example, fuel credit cards help you save money on refuelling petrol and diesel in your vehicle. So it makes no sense to get a Fuel Saver card if you do not actually have a vehicle. Similarly, if you’re a frequent shopper, you can get a Shoppers Credit Card to get benefits when shopping. The point is, get a card that you know will benefit you because your spending pattern is aligned with it.

Budget

How much budget you allot to credit card spending also determines the type of credit card you choose. If your card spending budget is Rs. 20,000 per month, then ensure you get a card that has cash back benefits in that budget segment. If a card has cashback on Rs. 40,000 expenditure, and you spend only Rs. 20,000, then you are missing out on the cashback on your card. Thus, choose a card that has the right benefits for the right budget.

Credit Limit

A credit card with a higher credit limit will give you the flexibility to keep your credit utilization ratio below 30%. This will help increase your credit score and ensure a favourable credit history. The Credit Limit is decided by the credit card company based on your income.

Eligibility

There are many credit cards out there that have high income and high credit score requirements for eligibility. Apply for them only if you meet these requirements. There is no point in applying for premium credit cards if your application is ineligible for the same. To find out the eligibility of the credit card and only then apply for it.

Annual Fees

Credit Cards can charge annual fees for their usage. Even though zero fees credit cards are also available, they may be just standard credit cards with no real benefits. If you want excellent benefits from your credit card, you may have to go for premium cards that have annual fees, but also the facility to waive off the fees of your spending meets the requirements.

So, before you zero in on a credit card, keep the above points in mind and make the best choice based on your budget, income and spending pattern.