Though there are many credit cards available in India today, you won’t be able to find one that meets all your needs. So, the critical parameter while selecting the best credit card should be the purpose for which you’re selecting the card. While choosing a credit card, you should also check and compare different factors like charges, penalties, perks, privileges, etc.
Here is the checklist for selecting the best credit card in India.
Fees are essential elements to check while picking a credit card, as higher fees can offset the benefits you get from a credit card. You should check a few charges before zeroing in on the best credit card in India: the annual fee, late fee, cash advance fee, balance transfer fee, over-limit fee, and foreign transaction fee.
The annual fee is the charge you’re paying to the credit card issuer for using the card, and it varies from issuer to issuer. While the best credit cards give a waiver to the annual fee if your annual transactions using the card surpass a particular level. However, there exist several cards that offer a bunch of perks and charge a hefty annual fee.
- Cash advances
You can withdraw money from an ATM using a credit card, called a cash advance. Cash advances are considered as borrowings, and hence they attract a higher interest rate. The interest on cash advances starts accumulating from the moment you make the withdrawal, i.e., the grace period does not apply to cash advances. But, there exists a few exceptions like Bajaj Finserv RBL Bank SuperCard. It would be best if you used cash advances only for emergencies.
If you own more than one card, you can move the balance of one card to another; usually from one with a higher interest to a lower interest one. It helps you to consolidate the debt and reduce the interest burden. But, card issuers charge a processing fee for balance transfer from you, and usually, it’s 1% of the transferred amount.
The perks that the card offers should be more than the sum of all charges. Several credit cards offer waivers on various charges if you meet certain conditions on spending’s. Also, there exist free credit cards that do not charge annual and joining fees. Hence, compare the charges of different cards before applying for a credit card.
Check the perks
Credit cards offer rewards, discounts, and cashback to their members. And these credit card perks help you to save some money while making transactions through them. You can accumulate these perks and redeem them later for gifts and discounts. If you make payments for your day-to-day purchases using credit cards, select one that offers ample rewards. Remember, all reward points have an expiry date. Hence, redeem them within a stipulated period. The best credit card offers bundles of benefits while charging lesser fees.
Select the credit card depending upon your lifestyle and purpose
Your lifestyle decides which card you should opt for.
If you’re a frequent flier, opt for a travel card. A travel card offers miles for booking tickets that you can utilize for future ticket bookings. Apart from this, travel cards offer complimentary lounge access in airports, discounts on hotel bookings, offers at duty-free shops, etc.
A fuel card is a must for people who commute in their vehicles as they offer a waiver on fuel surcharge. Besides, fuel cards provide privileges in dining, entertainment, concierge services, etc.
If you’re a committed customer of a particular brand, then co-branded credit cards are the best fit for you. Or else, it’ll be better to stay away from co-branded cards as the benefits of these cards are limited to one brand or label. A co-branded card helps you to take maximum advantage of the offers from a specific merchant.
If you’re a student above 18 years, you can apply for a student credit card. The student credit card offers you many rewards, and if maintained properly, it helps you create a good credit history. But, different issuers have different criteria for issuing a student credit card. Therefore, check whether you’re eligible for one such card.
If you aim to build a decent credit score, go for a secured credit card. Typically, credit card issuers ask for collateral, usually a fixed deposit, to issue a secured credit card. And the credit limit of your secured credit card will be equal to the amount in the fixed deposit.
The credit limit is the maximum amount you can spend using a card. Try to keep the credit limit within your repayment capacity; otherwise, you may find it challenging to repay the balance and end up paying a higher interest rate. Several credit cards allow you to spend beyond your credit limit and charge a fee from you for the same, called an over-limit fee. Before applying for a credit card, check how much the card charges for the over-limit facility. Remember, your credit score will dampen if you cross your credit limit frequently.
Annual Percentage Rate (APR)
APR is nothing but the interest you pay on balance. To avoid paying interest, pay your dues on time. But if you fail to pay the minimum balance by the due date, then the credit card company will charge a late fee from you. Usually, the best credit cards in India charge a monthly interest rate of 3-4% for the unpaid part of your credit card bill. Select a credit card that has a lower APR.
- Grace Period
The grace period is the span between the billing cycle and the due date, during which you don’t need to pay any interest. Before applying for a credit card, don’t forget to check its grace period. Most credit cards offer a grace period ranging between 15 and 45 days; however, exceptions exist. To take benefit of the grace period, you should pay all your previous bills in full.
While selecting a credit card, compare the fees and benefits of various cards. Also, don’t forget to read the terms & conditions carefully.