Wondering how to choose a credit card for yourself? Adding a credit card to your wallet is a great way to become financially liberal. Having a credit card helps you during times of cash crunch as it makes funds available 24×7. But you need to be aware of the fact that they are like double-edged swords. On one hand, they let you enjoy all the features and benefits while on the other hand, it can easily lead you into a debt spiral.
Choosing a Credit card is a task of great responsibility. If we neglect or overlook any aspect while choosing a credit card, it may harm us in the long run. To choose the best credit cards suitable to one’s needs, it is vital to ask the right questions to yourself and compare credit cards online to understand the distinct features of the card.
1. Why do you need a Credit Card?
Before getting a credit card, we should recognize the reasons why we thought of applying for a credit card. What are your spending habits and what are your major future activities going to be? Asking all these questions can help you figure out which Credit Card Category you are looking for. For Example, if you like to shop frequently then you can go ahead with a Shopping Credit Card. Similarly, if you believe that you may need to travel quite a lot in the upcoming years then applying for a travel credit card may be wise for extra savings.
2. What are the Credit Cards that you are eligible for?
Assessing your eligibility to find out which credit cards you can get is very important to narrow down your search. You may ask yourself: What is my monthly income? How is my Credit Score? etc.
For example, if you have a credit score above 600, then you may have many options to choose from. Similarly, if you have a bad score (below 600) then your choices will get limited choices, you may also consider applying for a secured credit card in that case.
3. What is the Reward program of the Credit Card?
Almost all the Credit cards provide good reward programs, some much better than the other! Do you also need to ask yourself what type of rewards are you looking for? What are the ways you can redeem your reward points? etc.
For Instance, if you like to save more on travel then you would like to convert the reward points earned into air miles to save on flight tickets.
4. What are the fees and charges?
All Credit Cards carry certain fees like the Joining Fee, Renewal Fee (except the Lifetime Free Credit Card), interest rate, etc. It is always of utmost importance to ask about the fees and charges. How much are you willing to pay to enjoy the offered benefits? Is it okay for you to incur higher charges if the card offers luxurious benefits? If yes, then maybe you can go ahead with premium Credit Card ranges. Opposite to that, if you are skeptical about spending much on credit card charges, then you may go ahead with the ones having minimal or no joining and annual fees.
5. Are you familiar with the Terms and Conditions of the Credit Card?
Ask yourself, did you read the fine prints? Are you familiar with the terms and conditions of the credit card you are thinking about obtaining? It is vital to know that paying attention to these details is very necessary to use the Credit Card in the right manner.
They may include correct practices, reward program details, redemption policy, information about any hidden charges, etc. Knowing about all these can help you have a smooth experience with your journey of choosing a credit card that is suitable for you. You can get a complete idea about the terms and conditions on your credit card through its most important terms and conditions leaflet.
6. What is the Credit Limit?
Asking yourself questions related to the desired credit limit and comparing that with the credit card limits offered by the Credit Cards in liking is very important so that you don’t end up on the verge of exceeding your credit limit. Doing so will also hurt your credit score to a great extent. Starting your credit card journey with a low credit limit can really help you in building a good credit score. Once you completely understand how a credit card works then you can apply for the credit limit enhancement.
7. What is your experience with Credit Cards?
Are you applying for your first Credit card or do you have a good experience with Credit cards? Including questions about the experience will help you know whether to apply for an entry-level Credit card and keep it simple with a single credit card (in case of little to no experience) or to go ahead with high-level credit cards that may be a little tricky to use as a rotating cashback credit card.
Applying for your first credit card is a significant achievement, but it is not a simple procedure. The same goes for getting another new credit card even when you already have one. So, whatever the case may be, it is necessary to ask all of these questions to yourself and then compare credit cards online so that you can determine the best credit card options for yourself. After receiving the credit card the next step comes is how wisely you use it to your advantage. You need to be very cautious while using a credit card. You need to keep certain things in mind such as keeping your credit card dues clear on time and in full, another thing is maintaining your credit utilization ratio low between 30% – 40%. For these, you can register for auto-debit services so that you never miss a due date and to avoid overspending you can set a threshold limit as and when you reach that limit you will be notified about the same on your registered mobile number and on email.
Share your tips as to how you chose your credit card for the first time and whether it turned out to be the right decision or not in the comment section.