The trend of using a credit card is on the rise for the affluent population, who can afford the expense. Given the abundant variety of options available for credit card users, it is vital to understand how to choose the best one. Once you understand how to use a credit card, you can set down your financial goals to make an informed choice.
Informed users of credit cards usually obtain one to fulfill one or more specific needs. For each such need, you should check certain details of a card before choosing one.
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Different Needs For Using A Credit Card
Here are some examples which define the uses which you can make with a credit card.
To improve your CIBIL score, you should check a card for its annual fee and the cost of other charges which are levied on it. Credit card users such as these simply make use of a credit card to improve and maintain their credit score. This helps them obtain additional finance from formal institutions when they need it.
For better discounts, cashback offers, and additional deals on using a credit card, you should check the offers which are being given by different credit card companies. Most credit card companies offer handsome deals on shopping, hotel bookings, air travel, and more. When using a credit card to make payment for these, you can earn reward points in return.
If you are looking forward to making a hefty expenditure using a credit card, you should enquire about the maximum limit which is restricted by a credit card company on using the card. Using a card with a low limit will not allow you to make a big expense.
If you want to purchase an expensive product but in installments, it is important to check the payment options which are available on the credit card. Choosing a credit card which levies interest on EMI payments will end up costing big!
The features and benefits of a credit card are not enough to determine if a credit card is optimum for you. An analytical judgment of the objectives of using a credit card is necessary to find the right one.
So, what is it that you should look for, before choosing a credit card? Let us find out.
Factors To Weigh Before Choosing A Credit Card
Whether you are a first-time user or picking another credit card for yourself, considering the applicable charges on a credit card is vital. Some of the common charges which are applicable on credit cards in India are annual fee, renewal fee, waiver charges, late payment fee, cash withdrawal charges, balance inquiry charges, GST, and the rate of interest.
Overall, the applicability of these charges will give you a fair idea about the costs which you will have to entail by using a credit card.
Every credit card company offers a horde of offers, discounts, and cashback deals on their card. However, every credit card company segregates its credit card offerings into different categories, catering to the different needs of the users.
You have the option to choose between lifestyle credit cards, travel cards, shopping carts, and rewards cards. Each of these cards offers a different benefit to the user.
Accordingly, if you are someone who likes to travel frequently, a travel credit card will be useful for you. If you spend money on necessities like fuel, there will be an option for the best credit card for fuel. Similarly, if you use a card for shopping, a card that offers numerous rewards on spending will be amazing for you.
Check with your card company to determine if you qualify for a pre-approved exclusive credit card. Usually, credit card companies would waive off certain charges and provide an exclusive option with your credit card, if your credit score is good. If you are eligible for it, you can get a premium card.
Avoid Picking A Co-Branded Credit Card
In the past years, it has become common for banks to launch credit cards in association with brands.
Using these credit cards often makes you lose many benefits unless you are spending your money specifically on the brand itself. So, unless you are a specific user of a brand and hope to use your credit card to make purchases from it, it is better if you choose a credit card directly from a bank.
VISA And Master Card Options
Take a look at any credit card, and you will find the logo of Visa or Master Card on it. It is a misconception that the card may be issued by Visa or Master card itself. This is untrue. Visa and Master card are in fact payment systems, which process the payments from a credit card. It is a good idea to opt for either one of them because they are among the most common transaction systems which are operational all over the world.
You will often discover many offers which are brought specifically to users of these cards, which is done to promote the use of the card itself. Plus, if you travel outside the country, you are most likely to encounter merchants who accept either of the two cards.
Before choosing a credit card, pay attention to the applicable date of making payment for the credit card. This may be dependent on your spending cycle or your salary cycle.
It is advisable to choose either of the two, based on what feels comfortable to you. Missing a date to make payment of a credit card bill is not a good idea. So it is better if you decide on a cycle, at which you are willing to make the due payment comfortably.
Choosing the best credit card is not difficult as long as you follow these guidelines. The options available to users are abundant today. They are at liberty to pick a card which suits their requirements.
Always check the aforementioned factors before you commit to choosing any credit card. It is a significant financial decision, which will impact your standing and credit score.
(Disclaimer: The article is sponsored, and hence promotes some commercial links.)