We live in a world where we have so many options to pick from. Even basic everyday tasks like picking a toothpaste seem like an important entrance exam wherein I’ve to select the right option among multiple answers that appear strikingly similar. Some brands offer a miracle ingredient; others advertise an enhanced version than before. There are so many criteria to be considered before picking the best one.
I confess that I pick whatever looks the best when I am tired of making too many decisions. I know that this might work while grocery shopping, but not for more important things like choosing a credit card. Picking your credit card should definitely be a more refined exercise.
I wish I would have considered the following while getting my credit card.
# The Need
We often feel lost while comparing the numerous offers and rewards offered by varied cards and forget to sync the credit card with our needs.
Apart from a cashless shopping experience, there is much more to consider before you take the plunge. The first one’s your usage pattern.
- If you prefer paying your entire bill monthly, choose a card with no annual fee rather than looking for ones that offer the lowest interest rates. Select a longer grace period as you would have more time to pay off the bill.
- If you would like to use it to do your shopping, pick a card that offers a good credit limit. The last thing you want is to run out of your credit limit while you are shopping.
- If you wish to use your card for just emergency purposes, choose one that comes with low fees and low interest. You can avoid the frills in this case.
# Charges
Whoever said “There is no such thing as a free lunch” was probably right. The range of benefits that credit cards offer comes at a price. So you need to make sure that you pay the least to get the best. To achieve this, you need to consider the following:
- Joining Fees – Many cards belonging to the premium category charge a joining fee to enter the league. In some cases, they may waive off the charges if you transact beyond a certain limit.
- Interest rate i.e. Annual Percentage Rate - On an average, the interest rate varies between 22-48% per year. The rates may vary depending on your usage pattern.
- Annual fees - Most companies would charge annual fees while the first year might be free for beginners. However, there are cards that offer a lifetime of free services, you could choose those if you do not want to pay.
# Value for Money
Make sure to check the rewards that come with your card. You might want to check how many points your card offers against money spent. Check out how you can redeem them. Usually, credit card companies offer points that can be credited directly to your account. Sometimes, these points can be converted into air miles or you get gift vouchers. They can even be used at select sites to make a purchase. Check all other benefits that your card offers against how much you are paying for it and how you are going to use it.
Take advantage of these 3 important points as your checklist to make a decent choice before getting your Credit Card.
