How to choose the right credit card for yourself
In our day to day life, we tend to use many modes and payment methods, such as net banking, UPI, debit cards, cash, etc. But one payment method that, despite the plethora of benefits it offers, often receives negative reviews, is the credit card.
Instead of understanding that it’s entirely your usage and repayment behavior that anchors the role of credit cards in your life, we end up believing biased opinions or hearsay that demonize these payment methods and also super advantageous access to credit.
And most often, it is the inability to choose the right credit card that becomes the reason for the inability to maximize their benefits.
So how do you choose the right credit card from the wide range of credit card issuers and the types of credit cards they offer? Want to know?
Read on as we explain the key points to note when choosing a credit card for yourself.
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1. Spending habits
First and foremost, consider your spending habits when considering choosing a credit card. Analysis of your spending habits includes the frequency of purchases or payments and the category in which you tend to transact the most. Knowing this would help you better understand your lifestyle and match it with the right credit card.
Wondering why this is important? This is because most credit cards tend to target specific transaction types and user groups by offering higher reward points and other benefits on those transactions.
For example, if you travel a lot, get a travel credit card, as it offers greater benefits like free lounge access, hotel vouchers, airline miles, etc. on travel-related expenses such as hotel and airline reservations. Or if you tend to make frequent online purchases, pay bills, etc., you can opt for a specific credit card with cashback or online rewards.
Therefore, in this way, you would take the first step in know the category of credit card that complements your spending habits and offers maximum benefits according to your lifestyle.
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2. Membership bonuses and welcome benefits
The next step is to compare membership bonuses and welcome benefits of credit cards within your chosen category. Almost all credit card issuers these days offer that extra incentive in the form of signup bonuses and welcome benefits on their credit cards, making it more attractive to choose that card over the one with benefits. nil or lower membership.
These welcome benefits can be in the form of additional reward points upon joining, vouchers or coupons, etc.
Although some of these benefits may be provided upon activation of the card, some may be associated with certain conditions, such as only on a particular amount of spending in the first few days or making payment of the card fee within a time limit. specific.
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3. Financial charges
You might be wondering why compare credit card finance charges before zeroing out a card?
Yes, we would know that a finance charge is only taken from unpaid dues when you don’t pay the credit card bill on time and in full, and that charge may not seem to matter to someone who is a disciplined user, but it is still better not to turn a blind eye to these accusations.
This is due to the fact, not only are these fees burdensome in nature, hovering around 40% per year for most cards, but also because life is uncertain. Even if you have always displayed a disciplined behavior towards credit cards and intend to do the same in the future, the financial demands of life may one day put you in adverse circumstances in which you may find it difficult to repay dues on time and in full.
With this in mind, you should consider the finance charges levied by various credit card issuers before settling on a credit card. If a card has similar features and benefits, but lower finance charges, it may make more sense to opt for that card instead of the one with higher finance charges.
Read also : Why do millennials fall into the credit card debt trap?
4. Annual subscriptions and other charges
Most credit cards have membership fees and/or annual fees, which differ from card to card and issuer to issuer. Usually, premium cards that offer a higher and wider range of benefits tend to also involve higher annual and/or membership fees. But nevertheless, whatever category and credit card you intend to choose, it is necessary to compare these fees before finalizing a card.
However, many credit card issuers tend to waive or waive annual/membership fees when the credit card user spends over the threshold in a given period, which is usually the previous year of card membership. So don’t forget to check this aspect as well when comparing the fees of different cards.
In addition to this, there are various other credit card fees and charges, depending on the type of transaction. For example, spending over your credit limit will incur an overlimit fee, withdrawing cash from the credit card will incur cash advance fees as well as finance charges, failure to Paying even the minimum due on the billing date can result in both late payment charges and finance charges. fees on unpaid amount, etc.
The purpose of comparing these fees is to ensure that the savings made through cashback, discounts, reward points, etc., outweigh the mandatory fees and other charges levied.. After all, there is no point in opting for a card that barely offers savings on transaction costs and, on top of that, incurs high annual/membership fees and other fees.
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5. Reward Points Program
Rewards points are one of the main advantages that credit card issuers promote when presenting their credit cards to target consumers.. After all, the rewards points you accumulate on your spending and the redemption benefits you get for those accumulated rewards points are the two aspects that anchor the credit card issuers rewards points program.
This is why it is important to compare these two aspects of different credit cards before focusing on one. Reward redemption programs vary by card and issuer, but generally involve benefits such as the conversion of reward points into gift certificates, air miles, the purchase of specific products or the use of services at certain points of sale and/or online partners, or even the adjustment of points against the unpaid credit card bill.
Also, most card rewards points expire in 2-3 years, while few card issuers offer credit cards whose rewards points do not expire. It would therefore be prudent to also compare this aspect when selecting the right credit card for yourself so as not to miss out on the benefits of redemption.
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