how to choose credit card wisely

How To Choose a Credit Card Wisely: A Complete A to Z Guide


Last Updated on 21/02/2019 by Deepak Singla

Are you planning to apply for a new credit card anytime soon? Are you confused about which credit card to choose? Are there so many options that you are confused about which card to go for? If your answer is yes to even one of above questions, this article is the perfect read for you. Finding the right credit card to suit your personal spending habits may seem challenging, but, remember, it is not rocket science.

Picking the best credit card is pretty simple if you know what your needs are. It is also important to keep in mind that no credit card is better than the other. Different credit cards offer different features and benefits, and there are also various categories of cards such as travel cards, rewards cards, and cash back cards. To put it simply, selecting a credit card is just like finding the perfect pair of jeans – it is all about finding the right fit for YOU! Let’s simplify the process for you and break it all down!

First, understand what you’re going to use the Credit Card for

Do not be in a rush to apply for a credit card and go for the first card that you come across. Be a little patient if you want to get the best deal that works out for you personally. The first step to take is to understand what your personal spending needs and patterns are. In the recent years, the types of credit cards offered have only increased, making it a little bit harder for the average consumer to make a choice.

Should you go for a Travel Credit Card or Cash-back Credit card?

So, at this stage, it is wise to ask yourself some questions. For example, if you travel frequently, it is best that you go for a travel rewards credit card. This will fetch you a good sign-up bonus, will earn you points or miles that can be used to book flights, and you will also enjoy other perks like priority boarding, waiver on baggage fees. Apart from this, you can also get exciting discounts on flight bookings and even hotel bookings with this card. On the other hand, if you use your credit card regularly to shop for groceries or for fuel, a cashback credit card will be ideal. However, remember, these types of cards have a minimum spending limit, so if you do not use your card regularly, it is not a good choice for you.

Always Compare and Apply

There are thousands of credit cards that are available in the market and even the most financially savvy person can feel overwhelmed. This is why it is important to compare all cards and weigh the pros and cons. There are a number of personal finance apps in the market that can help you compare the features and benefits of various credit cards in the market. For instance, the BankBazaar mobile app, which can be downloaded from Google Play Store and Apple App Store, can help you compare and apply for credit cards offered by different banks and also check your credit score for free.

See, if you need a No-annual Fee Credit Card

Remember that not all credit cards come with a lifetime free offer. There are many credit card companies that charge you an annual fee. And, some banks will charge you if you do not spend a certain prescribed limit in a given year. Try to go for a card that does not come with an annual fee if your credit card usage is basic and minimal.

Check the Credit Limit, Fees, and Charges

It is important to access your financial needs so that you can choose a credit card that gives you a comfortable credit limit. Also, be aware of the charges and penalties involved in case of late payments. Check if the bank allows you to convert large purchases into easy EMIs. See how the bank treats balance transfers and cash advances well before you apply for the card to avoid any confusions later.

Also, be aware of the Perks, Incentives, and Benefits offered

While you should not be carried away by the perks and incentives that are advertised, it is also important to note that many credit card companies genuinely offer a number of benefits. These may be in the form of special discounts at a specified list of restaurants, buy-one-get-one-free movie tickets, reward points, purchase protection, travel insurance and the like. It is wise to read the fine print and see what the terms and conditions are when it comes to such offers.

Interest Rates

One of the most important factors to consider is the interest rate that is charged for payments. Check if this is a fixed rate or if this is variable rate that changes with an external indicator. Make sure you are fully aware of this aspect well before you fill out the credit card application form because you do not want to get a rude shock once your credit card bill statement arrives. Choose a card that offers a relatively low interest rate. There are also balance transfer cards that allow transferring of pending dues with no charge and there are also 0% APR cards or low interest credit cards. So, choose wisely!

The bottom line:

Having the right credit card can open doors to a healthier and fulfilling financial life. So, take your time and do your research before applying for one.