Applying for the right credit card can ensure long-term benefits for the cardholder. This can be done in two steps. The first step is to research the important aspects of a credit card. The second step is to match these aspects with your individual requirements. Let’s find out 7 factors to consider when searching for the best credit card in India.
- Credit Score
Your credit score, or CIBIL score, is the first and most important factor you should take into account while getting a credit card. A credit card is linked with one’s credit score in ways more than one. Firstly, it is the basic eligibility criteria for getting a credit card. Generally, a minimum CIBIL score of 750 is considered to be good enough for getting accepted for most credit cards. Secondly, once you have a credit card, it affects your CIBIL score. With timely credit card repayments, you can improve your CIBIL score. So make sure that you have the minimum credit card CIBIL score before you apply for one.
- Purpose of Credit Card
Secondly, you need to ascertain the reason why you want a credit card. This helps you decide the kind of credit card that you should apply for. For instance, if you want a credit card to build your credit score, getting a secured credit card would be a good choice. If you want a credit card to earn cash backs and avail offers, you should opt for a rewards credit card.
- Interest Rate
When searching for the best credit card in India for your needs, you must compare the interest rates of various credit cards. The interest rate is referred to as the APR (Annual Percentage Rate) in credit card offers. It can be a fixed rate or a variable rate. As the name suggests, the interest rate remains the same from month to month in a fixed-rate card. On a variable-rate card, it can fluctuate based on another financial indicator. Choose an interest rate that suits your financial goals.
- Fees and Penalties
There are several charges attached to a credit card including transaction fees, cash advance fees and balance transfer fees. Moreover, there are penalty charges on the late repayment of credit card bills. Assess all fees and penalties of a credit card carefully before you apply for it.
- Minimum Amount Due
Minimum Amount Due is the minimum amount that a credit cardholder is required to pay by the payment due date to maintain their card account. It’s typically a small portion of your total outstanding amount every month. Finding out the minimum payment of a credit card is imperative as the inability to pay it can make you incur financial losses.
- Credit Limit
The credit limit of your credit card impacts a lot of things pertaining to your credit card usage. Ideally, your credit limit should be enough to cover your necessary expenses and give you a little extra room in case of emergencies. But it should also not be so much that it becomes a problem for you. Nevertheless, a higher credit limit enables you to strengthen your credit score with time, if you maintain your spending at a lower utilization rate. Thus, you should determine your ideal credit limit according to your income, expenditure and spending behaviour.
For instance, young earners starting out with credit are advised to go for a low credit limit. With growth in income, they can move on to a higher limit on their credit card.
Once you’ve shortlisted your preferred credit cards on the basis of the primary factors mentioned above, you can compare the incentives they provide. These incentives can widely vary from cash backs on purchases to reward points and bonuses. Cards that come under the category of “best credit card in India” offer flexibility in incentives and easy to earn rewards. Moreover, you should choose a card with incentives that match your lifestyle. For instance, if you’re an avid traveller, a travel rewards card would be the ideal choice for you.
In conclusion, you can easily shortlist credit cards based on your credit score and your purpose for getting a credit card. Furthermore, you can finalise on a credit card based on its interest rate, fees, minimum due, credit limit and incentives. Keeping these factors in mind can help you find the best credit card in India, based on your specific financial goals and circumstances.