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Business
02 Jan 2019

#FinancialBytes: Factors to consider before taking a credit card

Things to know before selecting a credit card

Credit cards have become an essential financial tool today because of the convenience they offer. People use credit cards for almost everything, including online/offline shopping, bill payments, travel-purchases, etc.

Credit cards are designed to meet different requirements. Before selecting one, people must pay attention to some important things to make the most of it.

Here are some factors to consider before taking credit cards.

In context

Things to know before selecting a credit card
Analyze your shopping habits to find a suitable credit card

#1

Analyze your shopping habits to find a suitable credit card

Finding a suitable credit card can be difficult as there are many card types catering to different requirements that offer various benefits and rewards programs.

One must analyze their spends and shopping habits and know which card best suits them for earning reward points, cashbacks, discounts, miles, etc. Frequent travelers can choose travel cards while shopping lovers can choose rewards cards and so on.

#2

Know about the interest rate charged on the credit card

Another important factor to consider before taking a credit card is the rate of interest.

Interest rates on credit cards are generally higher. Credit card providers follow Annual Percentage Rate (APR)-based daily compounding interest rate.

Depending on the card type, one can find cards either on fixed or variable interest. Also, some providers offer interest-free period from date of transaction to payment due date.

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Which is better for you? Secured or unsecured credit card?

#3

Which is better for you? Secured or unsecured credit card?

Before choosing a credit card, one should consider whether a secured or unsecured credit card is more suitable for them.

A secured credit card generally comes with lower rates of interest and is issued against collateral or fixed deposits. The credit limit depends on collateral value.

Unsecured credit cards, however, don't require any collateral to be issued but usually have higher rates of interest.

#4: Credit limit offered by the bank

One should also consider the amount of money the bank/credit card provider is willing to lend. Depending on a person's income, eligibility criteria, and other factors, the issuer sets a limit. To avoid trouble, one must ensure that they spend within their credit limit.

#5

The minimum payment amount for your credit card transactions

While applying for a credit card, one must understand how their bank would calculate the minimum payment amount for transactions.

The calculation might differ from bank to bank and one must go forward only if they can pay the minimum amount every month regularly.

Also, one must consider other charges like transaction fees, cash advance/balance transfer charges, late payment penalty, etc. levied by banks.

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Most asked questions

Which are the credit cards with good rewards point programs in India?

How to save on purchases using credit card?

Are there any good travel credit cards for frequent fliers?

Credit card options for a student or someone with zero income?

More questions

Which are the credit cards with good rewards point programs in India?

Asked 2019-01-02 21:16:02 by Vivaan Jain

Answered by NewsBytes

Here are some credit cards offering good reward points and other benefits: Standard Chartered Platinum Rewards Credit Card, SBI SimplyCLICK Advantage Credit Card, YES FIRST Preferred Credit Card, HDFC Diners ClubMiles Credit Card, and Citi Rewards Credit Card.

How to save on purchases using credit card?

Asked 2019-01-02 21:16:02 by Abhinav Khan

Answered by NewsBytes

Are there any good travel credit cards for frequent fliers?

Asked 2019-01-02 21:16:02 by Ridhi Rangan

Answered by NewsBytes

Travel credit cards offer rewards, free flight tickets, coupons to frequent flyers. Here are 5 good options: (1) Jet Airways American Express Platinum Credit Card, (2) Citi PremierMiles Credit Card, (3) Air India SBI Signature Card, (4) American Express Platinum Travel Credit Card, and (5) JetPrivilege HDFC Bank World Credit Card.

Credit card options for a student or someone with zero income?

Asked 2019-01-02 21:16:02 by Navya Patil

Answered by NewsBytes

In India, some banks issue credit cards to people with no income, even students, against fixed deposits and strong savings accounts. Some options include: Axis Bank Insta Easy Credit Card, SBI Card Unnati, ICICI Bank Instant Platinum Credit Card, and Kotak Mahindra Bank's Aqua Gold Credit Card.

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