Why is selecting the right credit card so important? How do you find the best card that suits your spending habits and lifestyle? If you’re seeking answers to these questions, you’ve come to the right place. With a plethora of credit cards available, choosing the right one can be overwhelming. However, selecting the right credit card is crucial as it helps you manage your finances effectively and maximises the benefits of every expense you make.
Here are five tips to select the right credit card for you
1) Assess your spending habits
The initial step in selecting a suitable credit card is understanding and assessing your spending habits. This is because distinct credit cards cater to different spending styles. For example, if you travel frequently, a credit card that offers air miles or travel rewards would be an ideal choice. You can use these accumulated rewards to get discounts on air tickets, hotel bookings, and more. On the other hand, if you spend a lot on lifestyle and shopping, a credit card that offers reward points or cashback on shopping would be more advantageous.
2) Finance charge and other fees
The next crucial factor to consider when you apply for a credit card is the finance charges and other fees associated with it. Credit cards have varying finance charges, and it is essential to select one with a low interest rate to keep your costs low. Also, be aware of the annual charges and if there is a waiver on such fees if you surpass a specific spending threshold. Comparing these charges can help you to choose a cost-effective option.
3) Rewards and offers
Credit cards come with a variety of offers and rewards. Some cards provide cashback on specific categories of spending while others provide reward points or miles that can be redeemed for distinct benefits. Thus, look for a card that offers rewards and discounts that are in alignment with your spending pattern. For instance, if you spend a lot on entertainment and dining, a credit card that offers rewards in these categories would be a perfect match.
4) Credit card limit
The credit card limit is the maximum amount you are allowed to spend using the credit card. It is crucial to consider the limit offered as it gives you an idea of how much you can spend. While a higher credit card limit offers you more flexibility in your spending, it could result in overspending if not managed smartly.
Thus, choose a credit card with a limit that matches your financial discipline and spending habits. This way you can use your card effectively. Also, it is crucial to note that keeping your credit utilisation ratio at or below 30% helps maintain a good credit score. Exceeding this ratio may make you appear as a credit-hungry individual, which could lead credit bureaus to lower your score.
5) Specific card features
Consider the specific features that some credit cards may offer, as these can provide additional benefits tailored to your requirements. For instance, if you frequently use UPI, you might consider opting for the IndusInd Bank Platinum RuPay Credit Card. This card allows payments via UPI and rewards you with two points for every ₹100 transaction performed through UPI. Also, this RuPay Credit Card offers a fuel surcharge waiver, making it an attractive feature for those who frequently utilise their card for fuel transactions.
Ending note
Choosing the correct credit card is an important process that depends on your specific requirements and spending patterns. Whether you are applying for a card for the first time or looking to add another one to your wallet, considering tips such as assessing your spending habits, checking the finance charges, and evaluating rewards and other benefits offered can guide you in making a well-informed decision. At the end of the day, the best credit card is the one that provides you with maximum benefits for the types of expenses you regularly incur
