From buying groceries to paying utility bills, credit cards are the preferred mode of payment that has become seamlessly integrated into our daily lives. Credit cards are an easy source of emergency funds and help you establish a solid credit history.
Picking the right credit card can take time and effort. You must assess your spending and repayment capacity before choosing the right one.
You must consider the following checklist if you plan to apply for a credit card.
Credit Card Charges
Credit cards come with separate charges like annual fees, joining fees, renewal fees, cash advance fees, late payment fees, etc. The charges vary for each bank depending on the type of card you have applied for.
Some banks and financial institutions waive the annual fees on spending a considerable amount while some banks like IndusInd also offer Credit Cards which have wonderful offers and rewards and come with zero joining fee and zero annual fees. Hence, it would be a good idea to compare the charges of credit cards online before making a final choice.
Your credit card limit is the most you can spend with your credit card. It is determined by several factors, including your income, credit history, credit card type, and approved limits on other credit cards you own. It’s a good idea to pick a reasonable card limit that suits your requirements.
A credit card grace period is the timeframe between the end of a billing cycle and the day your payment is due. The bank allows you to pay your outstanding dues during the grace period without interest charges. Paying your dues fully within the grace period is advisable to avoid late payment fees and improve your credit score.
Credit card companies charge interest when you put off a payment past the grace period. Depending on the credit card you choose, this interest rate can range from 3 to 4%. Additionally, banks impose high charges on cash withdrawals made with credit cards. Do check the interest rate applicable on your card if you are likely to delay payments.
Rewards & Incentives
Almost all credit cards provide incentives or reward points for purchases. Such incentives come in the form of vouchers, discounts, cash back offers, or airline miles. Some credit cards even allow you to use rewards or cash back to pay your bill.
IndusInd Bank has a one-of-a-kind feature in which your rewards points never expire and can even be converted to cash to pay your outstanding bills.
Therefore, before applying for a credit card, you should fully comprehend its rewards scheme and choose the one that would be most appropriate for your lifestyle.
Read The Terms & Conditions Carefully
Each credit card benefit and reward has a cap. You must dig deep into the credit card’s terms and conditions to fully understand what you will receive. Ask the bank for clarification if you discover anything that was either not explained to you or differs from what was presented to you.
Getting the instant credit card is just the beginning, use it wisely to minimize risks and maximize its benefits. Paying your bills on time can go a long way in improving your credit score.