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How to Choose the Best/Right Credit Card?

  • Yashoda Gandhi
  • Dec 03, 2021
How to Choose the Best/Right Credit Card? title banner

There comes the time when your demand for money is actually more than what you have in your pockets.To meet such demands, numerous financial organizations provide you with the option of borrowing money from them via credit cards.

 

A credit card is a financial instrument that helps you in borrowing money from your respective bank in order to meet your required costs, while you can also return the money later during a due date.

 

A credit card gives the money in terms of credit to meet our financial needs at the moment. This amount is later being paid to the bank after the agreed period of time by bank as well as the credit card holder.

 

 

Features of a credit card

 

  • As an alternative to cash

 

A credit card is a better option than cash. It eliminates the need to carry many money denominations to pay at trade counters. Using a credit card is easier and faster than waiting for cash transactions to be completed.

 

As an alternative, a credit card allows the cardholder to go anywhere in the globe without carrying a large quantity of cash. It also decreases the possibility of money theft and provides total peace of mind to its user.

 

  • The credit limit

 

The credit cardholder benefits from the provision of a credit limit on his card. The credit card issuing company (bank or NBFC) determines this credit limit only after examining the cardholder's creditworthiness.

 

There are two sorts of credit limits: normal credit limits and revolving credit limits.

 

  • Normal credit limit refers to the amount of credit granted by a bank or NBFC when issuing a credit card.

  • The revolving credit limit fluctuates according to the credit cardholder's financial vulnerability.

 

  • Payment of aid in both domestic and foreign currencies

 

A credit card allows its bearer to make payments in any currency of their choosing. In other words, it provides its bearer with the unique ability to make payments in either local (native) currency or, if necessary, foreign (non-native) money on an as-needed basis.

 

The use of a credit card simplifies the time-consuming procedure of currency conversion. That is, it eliminates the financial complications that are sometimes experienced when changing a domestic currency into a foreign currency. 

 

Because of this functionality, a credit cardholder may make payments to merchants in any part of the world.

 

  • Charges that are consistent

 

Regular charges are fundamental recurring charges imposed by the credit card issuing business on the cardholder's use of the credit card. These fees are insignificant.

 

The regular charges are divided into two categories: annual charges and additional costs.

 

Annual costs are collected on an annual or per annum basis. Other supplemental services offered by the credit card issuing corporation are subject to additional costs. These services include add-on cards (extra credit cards), the issuance of a new credit card, and so on.

 

  • Annual percentage Rate

 

Annual percentage rate is also known as APR. It refers to the yearly interest created by an amount that's charged to borrowers or paid to investors.  APR is known as a percentage that shows the accurate yearly cost of money throughout the period of a loan or revenue produced on an investment. 

 

This includes any fees or other expenditures involved with the transaction, but does not account for compounding. The APR offers consumers with a single number that they may use to compare lenders, credit cards, and investment products.

 

  • Benefits and Rewards

 

There are different ways a credit card provides us benefits and rewards. some gives us in form of cashbacks or through points which can be redeemable on future purchases.

 

You can earn rewards on some or all of your purchases, and you can redeem them once you've achieved a certain amount, depending on the rewards programme.

 

Benefits that vary per credit card include travel and trip cancellation insurance, rental car insurance, extended warranty, and purchase and price protection.

 

  • Grace Period

 

Grace period is something where the amount of time you have to yourself before the finance fee is applicable to your account. if the previous months debts are not paid then ,you might not gate grace periods on your purchases because of it.

 

Additionally, grace periods are also given during bank tranfers as well as cash advances.it is very easy to find out the grace period all you have to do is check your credit card application it is stated in that. monthly statements has to reflect the number of grace day left
 

(Recommended reading: Credit Risks)

 

 

Selecting the credit card

 

There is no one superior credit card that aces in all terms or satisfies everyones need However, by researching your options and asking the proper questions, you can choose the ideal card for your spending patterns and credit condition.

 

When selecting a credit card, you should carefully consider variables such as offers, discounts, cash-back, charges, fees, payment alternatives, services, terms and conditions, and the credit limit. 

 

Credit cards are a two-edged blade that may both build and damage your credit history. As a result, it is important for us to know all the aspects of a credit card so that we can avoid mess further.

 

  • Understand why you want a credit card

 

You must determine why you need a credit card. It is possible to live without a credit card, but keeping one or two in your wallet is a smart idea. Credit cards can help you finance large purchases, offer emergency finances, and protect you from fraud. 

 

Using a credit card properly is also an excellent strategy to improve one's credit. There are three main reasons why someone might need a credit card: to develop credit from zero, to obtain a greater credit limit in order to make larger purchases, and to take advantage of deals across several spending categories. The greatest credit card for you is one that meets your needs.

 

 

  • Understand your credit card eligibility

 

Once you've determined why you want a credit card, you should learn about your personal credit profile and which credit cards you could be qualified for. For example, you may want a credit card with exciting travel features, but your salary may be insufficient to qualify for the card. 

 

As a result, you must verify that the card you apply for has a strong probability of being approved. Paisabazaar recommends credit cards depending on your credit profile and salary.

 

1. Credit scores are available for free by many.

2. Many credit card companies provide free FICO ratings to customers.

3. Experian , equifax and transUnion are the companies that helps in showing your credit score.

 

If the result isn't what you expected, go into your credit reports to determine what's causing the issue. You may then begin to consider measures to improve it, such as adjusting your spending habits or challenging an inaccuracy on your reports, if necessary. 

 

Every 12 months, you are entitled to one free copy of your credit report from each of the three main bureaus under federal law. AnnualCreditReport.com, a legally recognized website, offers free credit reports.

 

 

  • Credit Cards to Consider

 

You can shortlist a few credit cards based on your eligibility. This can help you in choosing the right  credit cards.  To narrow down the cards, ask yourself some basic questions, such as if you can pay the yearly charge or whether it meets your basic demands.

 

There are three different sorts of credit cards:

 

  1. Cards that can help you rebuild your credit if it's been damaged or restricted.

  2. Cards that allow you to avoid paying interest.

  3. Cards that increase your score.

 

The ideal card for you is one with features tailored to your unique need. If you don't travel frequently, then  the best travel card in the world won't be of much use to you.

 

Out all the cards you've considered, choose the one that offers the best overall value.Take a forward-thinking attitude here. Consider if you want to use this card five years from now. Check to see whether the bank allows you to upgrade to another card later.

 

 

  • Choose how you want to apply

 

You can apply directly through the bank's website or via a third-party website. With the latter, you may compare credit cards from several banks to discover the best credit card for you.

 

When choosing a card, keep in mind that you can include any money you have reasonable access to on the application, not just your own income. This might include money from grants and scholarships, as well as parental allowances for students. Others may include the income of a partner or spouse.

 

(Must read :10 best credit cards)

 

Conclusion

 

It's a major step to pick the best credit card, but don't quit . Use your credit card appropriately to get the most out of it. If you're trying to build credit, pay your bills in whole each month and don't use up too much of your available credit.

 

If you've gotten a 0% APR loan, stick to your repayment schedule. If you want to earn points, use your card for ordinary transactions and pay your payment in full each month.

 

Whether you're trying to build credit, borrow money, or earn rewards, the credit card you use should help you achieve those goals in the most premium and efficient manner possible. Accept nothing less than the best.

 

(Related reading: What is a Credit Rating?)

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