How To Choose The Right Credit Card?

Nowadays there are countless credit card offers that keep your phone buzzing all the time. Banks often lure us with discounts and rewards but what should you really keep in mind if you’re buying a credit card? Here is a checklist:

  • Credit Score
  • Financial Needs
  • Credit limit
  • Fees
  • Rewards
  • Interest Rate

1. Check Your Credit Score

A credit score is a number that reflects your probability of paying the credit back. This determines your eligibility for a particular card and is a key factor banks consider while lending you money.

People with a poor credit score are expected to pay an annual fee and a higher interest rate than people with a good credit score. For a score with a range of 300-850, a credit score of 700 or above is considered good.

The Catch – If you have a better score, you get a card with better perks.

2. Assess Your Financial Needs

Its important to reconcile your budget with your daily needs. Thinking about how and on what you spend money, you can consider buying a card best suited to your requirements.  If you travel a lot then you clearly spend a lot on fuel. By getting a Best Credit Card For Fuel you can save every time you buy fuel.

You can opt for a credit card with no annual fee in case you are going to pay its bill every month. Else, a card with low interest rate would be better (in case you don’t use it often for making payments).

The Catch – If you make frequent payments with your card, go for one with the maximum reward points program.

3. Check Your Credit Limit

Credit limit is the amount of money that the card issuer lets you borrow. All of it depends on your credit history. This limit keeps your purchases in check. But one has to be wary of no-limit credit cards as they can have an adverse effect on your credit score.

The Catch– It is better to start off with a low credit limit so as to manage your finances well.

4. Know The Charges

Another major factor while choosing a credit card is its fee. Mostly, the charges included in getting one are annual fee, late fee, extra charges on the transactions made, cash advances, balance transfers, expanding your credit limit etc.

The Catch–  Opt for cards with reasonable fees, which don’t charge you extra for your transactions etc.

5. Earn Reward Points

While picking up a card you can go for the one with the highest rewards for the categories you spend the most on. Some credit card providers offer discounts, points or cashback on products and services purchased through their own or partner companies. This can be a great way to save money on items you are likely to purchase or services you tend to spend on.For instance, Jet Airways provides reward points in the form of JP Miles which can be redeemed on flight tickets, shopping etc.

Everyone knows how to choose a credit card which aligns their lifestyle but also focus on reward points to make the best use of your credit cards.

The Catch– Align your card with your spending or else you may miss out on earning maximum rewards.

6. Know the Interest rate

While selecting a credit card one should also consider the interest rate, which appears on the card as annual percentage rate. Here, we have fixed well as variable interest rates. An average credit card interest rate ranges from around 13.24% for (cash-back cards) to 20.9%.

The Catch- To save more, go for a card with no annual fee (atleast for the initial year)

So, instead of grabbing the first credit card offer you get, look out for the above-mentioned factors to help you choose the best credit card as per your requirements.

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