How to select an Ideal credit card?
Today it is difficult to come across
a person who doesn’t own a credit card. With the rise in standard of living,
banks are coming out with increasing number of cards offering number of
innovative features. While it increases the number of options open to the
customers, this innovation can also confuse the person looking to own his first
credit card. As a result, it is very important for you to choose the right
credit card so that you can get the best out of credit card. We answer some of
your questions on how to select the right credit card for your needs.
What card is ideal for me?
As the features offered by each
credit card varies, it is essential for you to understand which features will
benefit you a lot. If you are shopping regularly at a particular store, go for
a credit card that offers your reward points or cash back or discount when you
shop at that store. Don’t select a card that offers you free air miles on
usage, if you are not a regular flier. Do you use the credit card to pay your
utility bills? Then choose a card that provides you benefits for paying your
bills. Besides rewards, also take a look at the interest charged. If you intend
to carry outstanding balances each month, then it is advisable to choose a card
offering a low interest rate. But if you can manage to pay off the balance in
full at the end of each month, it is advisable for you to go for a card with
high interest rate but with low or nil joining and annual fees. If you are
traveler, check out if the card has widespread acceptance.
What are the important features my
card should have?
Though cards contain many important
features, some are the more important than others. While we all like to be
rewarded for using the card, it should not be the sole criterion affecting your
decision. Instead here are some essential features to look at when choosing a
card.
- Annual/joining fee: While most banks offer entry level
credit cards for free, these fees are still levied on the high end credit
cards meant for businessmen. If you happen to pay your card balance each
month, then these fees will make it expensive for you to use the card. In
this case, it makes more sense to opt for the card that doesn’t charge any
such fees.
- Credit limit: If you are a heavy shopper, always select
the card offering you the highest credit limit. It will prevent your card
from being rejected due to insufficient credit limit.
- Cash limit: Do you always swipe your card to withdraw
cash in case of emergencies? If yes, then you must always take a look at
the cash withdrawal limit available on the card.
- Interest rate: Do you always like to carry unpaid
balance each month? If yes, then always select a card charging lowest
interest rate, as high interest can very easily land you in debt.
- Acceptability: Is your card accepted across wide range
of establishments? Is it accepted internationally? While Visa and
Mastercard are universally accepted, Diners and American Express have
limited acceptability.
- Other charges and penalties: Besides fees and interest,
remember the bank also charges you various other fees like late payment
fees, cheque bouncing fees, over limit fees etc. Watch out for these fees,
as they are very high.
- Quality of service: Not all banks provide the same
level of customer service. Check out if the bank offers 24×7 customer
service for its credit card customers. This is helpful if you have to
report stolen card, check your credit limit or want to discuss any billing
problem with the customer service.
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