It is not easy to get a credit card you would love to use and importantly – you truly deserve. Some may give limited features and an abysmally poor reward points ecosystem whereas others offer generous discounts on travel and fine dining. Few cards are good for the moviegoers while others are tempting for online shoppers. All these factors must be considered before you decide which card to go for.
So, there are a slew of factors which you should be careful about before you apply for a credit card. Here, we briefly describe some of them.
Consider these 6 factors before applying for a card
I. Purpose of the card: One of the most important factors to consider before you apply for a card is its purpose. Why are you getting this card? Is this because you want to track where all you spend the money on? Is this only to streamline your expenses or you intend to capitalise on travel and reward points while you are a frequent traveller?
Clarity over the purpose of securing a card is important to know if it aligns with the card’s offering.
II. Annual fees versus benefits: Not all, but some credit cards charge an annual fee from the card users. Typically, the range of benefits offered by these cards offset these fees. So, it is vital to evaluate the benefits a card offers in comparison to the fees it charges.
III. Reward points and redemption options: Another important factor that should weigh on your decision to opt for a card or not is the offering of reward points and the way they can be redeemed. For the initiated, each credit card offers reward points against the spending in proportion to money spent.
Higher the spend, greater the reward points. And lower the spend, fewer the points.
IV. Travel and forex benefits: Most credit cards offer a slew of benefits for frequent or sporadic travellers. These benefits include discounts on flight and hotel bookings, access to airport lounges. Additionally, some cards offer discounted rates on forex currency conversion mark-up fees.
Collectively, these benefits or the lack of them may help you save money, or cost you more, respectively. Therefore, it is recommended to factor in these benefits before you choose a card.
V. Interest rates and fees: Another important factor to consider is the rate of interest bank charges and the late payment penalty. If the interest rate is too low, you get an extra reason to opt for the card.
VI. Bank and customer support: Last but definitely not the least, reputation of a bank also matters a lot. The more reputed the bank, higher the chances of its customer service. And poor reputation reflects pathetic customer service.
(Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit. )