How to choose the right credit card? Here are 8 key tips you need to know | Mint

Credit cards are no longer a luxury but a necessity in today’s fast-paced world. They offer rewards, flexibility, and many more benefits. On the other hand, there are so many options to choose from that it can be confusing. Here we will guide you in choosing a credit card that suits your financial goals and lifestyle.

What are credit cards?

A credit card allows you to easily buy something online or offline and then pay for it. Most credit cards carry rewards that translate into some form of airline miles, points, or cash. This, in itself, boosts the return from your spending. Using credit cards responsibly-ensuring to pay your balance completely at the end of every month-helps to avoid excessive interest charges.

Tips to consider while choosing credit cards

1. Set financial goals: Determine if you want to improve your credit, cut down on interest charges, and earn rewards. Based on your spending habits, you then determine which type of card suits your needs best. Analyse your spending behaviour to find where you spend the most – dining, shopping, travelling, or groceries.

2. Check credit score: Your credit score will determine whether you qualify for a credit card and the interest rate that is awarded. Take a look at your credit score before applying. If it is not where you want it to be, focus on making it better by lowering your outstanding debt and making on-time bill payments.

3. Compare and contrast interest rates: Interest rates may vary among credit cards. If you tend to carry a balance often, then it’s good to have a low-interest card to save on interest costs. People who always pay the balance off might not need to look into interest rates as much.

4. Evaluate rewards and cash back programs: Many credit cards offer cash back or rewards on purchases. Some cards have rewards that are specialised to a specific area, such as dining, entertainment, travel, or gasoline. Choose a card that maximizes your rewards in those areas if you spend a lot of money there.

5. Find more rewards: Other benefits can include travel insurance, lounge access, and even special offers on certain items. Quantify these benefits against your lifestyle and against your current expenditure habits.

6. Compare annual fees: Some credit cards may have annual fees tied to the benefit and reward programs for the card. Compare the value from a certain benefit to determine its worth.

7. Consider credit limits: Credit limits vary for different cards. Select a credit card whose limit meets your spending requirements. If you have to spend frequently, get a card with a higher limit. However, do not get a card that will encourage you to overspend.

8. Simple application procedure: Look for a card issuer which offers a hassle-free digital application process. You can now apply online at most banks using just a few facts about yourself- PAN, mobile number and basic e-KYC information.

In conclusion, the right credit card can make a huge difference in your financial health. You may discover a credit card that max out rewards, spends less, and increases your finances by checking your spending pattern, financial goals, and the benefits each card may offer.

Remember that responsible credit card usage is the biggest advantage of having a credit card. Never spend more than you can afford and settle your bills on time.

(Note: Using a credit card carries its own set of risks)