What is the first thing that comes to your mind when you think of credit cards? Is it rewards over online deals or overspending habits? Different people look at the usage and benefits of credit cards differently. Having a credit card can save you from various financial troubles that generally come up because of non-availability of cash. Proper usage of these cards also builds up a credit history, which is essential when you plan to borrow loans.
Since various banks offer credit cards to eligible customers, it becomes difficult to choose the right credit partner at the customer’s end. If you want to apply for your first credit card, you should know how other experienced users selected a bank and the credit card. It will help you make an informed decision.
Here are four factors that impact the credit card selection process:
First and foremost, people look at how they will most likely use their credit cards before applying for them. If you want to use the card for regular online spending, including groceries, apparel, and smart devices, you would like a card that can help in getting significant rewards.
You might have also seen several online wallets and businesses collaborating with banks to offer reward-oriented credit cards. Similarly, there are cards offered directly by banks with various perks and benefits for the cardholder. Hence, you must apply for credit card after careful consideration of usage.
Finding a credit card that you would love to use in the time ahead won’t do much good if you are not eligible for it. Most creditors do not specify their minimum eligibility criteria. However, it is good to know your credit score before you apply for a credit card.
Your credit score or CIBIL is a number that tells the banks about your creditworthiness. It regularly goes up and down while you pay loan EMIs or credit card bills on time. Keep in mind that failing to make these repayments can hurt your CIBIL. An individual’s application for a credit card may get rejected if his/her CIBIL does not fulfill the bank’s guidelines.
Ideally, you should apply for a credit card after you know that you have a healthy credit score. Also, check if the chosen bank offers cards to applicants with zero credit score.
Annual Fees and Other Charges
A crucial step that people follow while opting for credit cards is to compare the related annual fees. This is the nominal fee charged by banks to facilitate the usage of credit cards. In most cases, it is easily affordable and is also reversed in case you spend more than a specific amount using the credit card.
Still, it is up to you to decide if paying the card’s annual fee makes sense to get various related benefits. You can do the math yourself by considering the sign-up bonus, perks, and rewards. In general, it is fair enough to pay a small fee to get several benefits of using a credit card.
Type of Credit Card
Check out any bank’s official website for the types of credit cards they offer, and you will find a plethora of options. There can be gold, silver, or platinum cards in some cases, while cashback card, business card, or travel cards in others.
Once you have decided to apply for a credit card to a renowned bank like Axis Bank, you need to narrow down your options to a handful of categories. This will require an assessment of your spending habits. For instance, a travel credit card would be the best option for you if you travel a lot for business or personal needs. It will help you earn reward points for airlines and hotels that can ultimately reduce travel expenses.
Finding the right credit card is easy, provided you know how to use it wisely afterward. You should know that credit card usage history can make or break your creditworthiness. Hence, be wise when you apply for a credit card and use it to your advantage.