Credit cards have become an essential part of daily financial transactions for many due to the flexibility and convenience they offer. From cashback offers to reward points, credit cards come with a range of benefits. The credit card issuers are offering customised cards to meet various needs of customers like shopping, dining out, travel and entertainment.
Amid the wide range of cards available in the market, it could be confusing for first-time credit card customers to choose the best credit card as per their needs. Understanding what to look for in a credit card is crucial to making a smart financial decision. Here are some of the key factors you must check to decide which card is best for you.
Five Things To Check To Select The Right Credit Card
1. Understand Your Spending Habits
It is very important to study your spending patterns. What are the things you spend the most on in a month? And what are the expenses you can reduce? Answering questions like these is important to decide which type of card is best for you.
For example, if shopping is a priority for you, you can look for cards offering cashback or reward points on e-commerce platforms like Amazon or Flipkart. On the other hand, for frequent travellers, a credit card with free lounge access and attractive discounts on flight bookings could be more suitable.
2. Annual Fees And Charges
Many credit cards come with an annual fee. As a first-time buyer, it may be wise to start with a card that has low or no annual fees. Some banks waive the fee if you meet a minimum spending threshold. It is important to read the terms and conditions carefully before finalising the credit card. This simple step will help you avoid unnecessary fees.
3. Interest Rates
Credit cards charge an Annual Percentage Rate (APR) on unpaid balances. It often ranges from 24% to 48% per annum. As a first-time buyer, it's advisable to repay your entire credit card outstanding each month to avoid high interest rates.
4. Rewards And Benefits
Rewards and benefits are the key attractions for any credit card. You must check the rewards that a card offers for different kinds of spending and see if it suits you. For example, if you want to access the airport lounge, check credit cards that offer the best complimentary lounge access without any additional fees.
5. Credit Limit
The credit limit is the maximum amount you can spend using the card. As a first-time buyer, your limit may be modest, based on your income and credit history. A lower limit can help you stay disciplined, but ensure it's sufficient for your regular expenses.
To conclude, selecting a credit card is a significant decision. You can compare the features offered by different cards online to decide which is best for you. You can also visit online portals that allow comparison of multiple credit cards based on their features.
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