There are a plethora of credit cards in the market. First one must clearly understand what a credit card is. Some cards are mere charge or debit cards. A debit card is one where you must repay the entire outstanding amount in one go during the billing cycle. Credit cards allow you the flexibility of repaying in instalments.
What should you consider when making a decision to get a credit card?
If you are the type who will repay the entire amount whenever a bill is received then try to get a debit card.
However if you need credit then a credit card has to be considered.
For those considering credit card check what the interest rate is. Some Banks offer as low as 1.99% rate per month. Most charge anywhere between 2.5 to 2.9%. A High interest rate can drain your finances.
What is the annual fees? Many card companies may waive the first year fee or charge a reduced fee. Check what their normal fee is. If their normal fee is Rs. 1000/- and they waive the first year fee, over a period of 5 years you would have paid Rs. 4000/-. However some other banks may only charge Rs. 500/- per month which would cost you Rs.2500/- over 5 years.
You must be clear what purpose you would like the card to be used for. If you are a frequent traveller then your card must be widely accepted at airlines, hotels, restaurants. Look for such cards. But if don’t travel much and wish to use the card for regular household expenses a premium card may be of not much help. Cards like Amex, Diners come in the first category.
Are you going to use the card often? Then look out for cards that offer reward points, special offers etc.
Depending upon your convenience you may choose cards which allow you to pay online. ICICI cards or HDFC cards allow you to pay online by debiting to your bank account with them. Also check where the collection centres are for the bill payment.
Does the card company allow you to use the cards to make utility payment online?
What is the liability if your card is lost?
Does your card double as an ATM card?
These are some of the questions you must ask before you make a decision. You may decide on a combination of factors depending on the preferences, conveniences, spending capability etc.
The ultimate choice is yours. A Card charging heavily need not be the worst. Or a card that is low in terms of fees and interest rate need not be the best.