How to choose the best Credit card? How to choose the best credit card in India? Top 10 Credit cards

How to choose the best Credit card?

Credit cards have become a necessity today. There are hundreds of credit cards with varied features and offers for customers. Hence it’s important to find out which card suits all your credit needs. Quite often, people end up choosing the wrong card after being attracted by a particular initial feature or offer. Later they will find that the card is not worth at all. As a general guideline, compare the features of different cards and choose the one which suit your needs. Also, read the Terms & conditions and check all the related fees and charges like interest rates, service charges, cash advance fees, Cash interest rate, etc. Hidden charges may prove to be big headache later.

If you are someone spending heavy on your card and carrying a large balance month after month, go for a low interest credit card. Such cards offer a low introductory APR (Annual percentage rate) that gradually increases after a certain period of time. Most cards will charge a higher interest rate for cash withdrawals/cash transactions than retail purchases. The difference could be as high as 5%-8%. Cash transactions may also carry other charges like Cash advance fees. If you are using your credit card for withdrawing cash regularly, you must be aware of these charges.

Cash Back Cards: If you settle off the entire balance on your credit card each month, then go for a Cashback card. Such cards offer you cash rewards (up to 5%) for making purchases using your card. However, Cash back card may carry a higher APR rate than other cards. So, if you don’t pay off your full balance each month, the higher interest rate will neutralize the benefit of the Cashback. Citibank credit cards offer Cash back up to 5%

Late payment and other Penalties: Credit cards will levy Late payment charges if the minimum payment due is not made within the due date. Similarly, you will be levied overlimit fees if you exceed the Credit limit. In India, credit card companies charge around Rs 250 as pate payment fees. Remember that default on payments will be reported by the company/bank to the credit reference agencies which may affect your credit status and borrowing ability in future. However, some cards may charge exorbitant penalties. Hence, read the terms and conditions with respect to penalty charges carefully

Balance Transfer Cards: Some offer Balance Transfer offers. Under Balance Transfer, if you are already paying high interest on a credit card balance, you could transfer it to a low interest rate or even 0% introductory APR card. For Example, if you have a balance of Rs 50,000 on a credit card with an interest rate of 24% p a, you could transfer the entire balance of Rs 50,000 to your new card with an introductory APR of 0% for say, 6 months. Here you can save the interest that you pay on the outstanding amount of Rs 50,000 for 6 months, which is Rs 6000. However, a fee may be charged for Balance transfers.

Travel Cards: Americans are addicted to earning rewards on their credit cards. Travel Rewards cards offer rewards for customers who travel or fly frequently. They typically offer Air Miles or Hotel reward points which you can redeem while booking your flight or Hotel ticket. For example, a customer earns 1 Air mile for every $20 he/she spends on her card. Once he/she accrues 500 or 1000 miles, she can use the same to book flight tickets to a desired destination. But, such cards may carry an annual service fee. American Express, Citibank Premium Miles, Jet Airways platinum etc are examples of Travel Rewards cards

Fuel/oil reward Cards: Fuel Rewards cards offer points for making purchases which you can redeem against fuel/oil filling at pumping stations. Some cards offer cash back whenever you use the card for buying fuel at petrol stations. Shell fuel credit card, Citibank oil Titanium, standard chartered super Value Titanium etc are examples of Fuel Rewards cards.

Customer Service: If you are an international traveler, your card must work worldwide without any hassle. Often, cards get blocked due to security reasons for which you need to call the company and get it unblocked. Hence, prompt customer service is highly essential