Credit card

A credit card is not just a payment tool. In real terms, it is more than the payment tool. It helps in transacting in a cashless manner. Cashback and Rewards Points are also available on purchases or expenses made by credit card. If used properly it also saves a lot.

1. Take credit card as per your requirement

When choosing a credit card, firstly choose the card wisely according to your spending pattern. like travel cards for travelers, shopping cards for shopping, etc. then use it in a controlled way. Only then you will be able to take full advantage of the credit card. Therefore, while taking a new card, it is necessary to keep in mind some important things that we have mentioned.

2. Eligibility conditions

You may not be eligible to urge all the credit cards available within the market. Therefore, shortlist only those cards that you are eligible to receive, that is, you should fulfill all their criteria like minimum income condition. Applying for a card that you are not eligible to get will reject your application and a bad ‘hard inquiry’ on your credit history may cause your credit score to fall.

3. Importance of annual fees

Many premium credit cards that offer higher benefits also charge an annual fee. This is taken to keep your card account active. You can also get a card with zero annual fees, but it will get limited benefits. Before taking a card with an annual fee, make sure you are getting extra mileage in return for that fee, such as bonus reward points, joining gifts, or free air miles. Download Report

4. Types of benefits found on the card

Various benefits and facilities are available on credit cards. However, you should get the best card according to the spending pattern in your normal life. For example, if you want to use your card only for spending on online shopping, online payment, etc., you should choose a card that gives extra cashback or more reward points for spending online. If you travel frequently then it would be better to get a travel credit card like SBI’s MMT card which can provide air miles, free travel insurance, and free lounge access.

5. Card spending budget

After shortlisting some credit cards based on benefits, you should see how many of those card benefits you will be able to take without exceeding your spending monthly budget. For example, suppose a credit card gives a 10 times reward on online purchases of more than or equal to Rs 30,000. But if the monthly budget for your home or pocket expenses is Rs 10,000, then you will not be able to take advantage of it. Therefore, you should see another card. Never spend more than your budget in the desire to make the most of the card rewards.

6. Reward Points

After shortlisting some cards based on your budget and preferred benefits, you should read the fine print to understand the reward points and cashback limits, partner merchants, reward points validity and redemption rate, etc.

example of rewards points problems

Suppose you get 5% cashback on shopping online with your chosen credit card, which is limited to Rs 100 per month. If your online shopping budget is Rs 10,000, then shopping with your credit card should save Rs 500 a month but due to the limit in cashback, only Rs 100 will be saved. Or suppose, the card you choose gives a 10 times reward on online spending on certain websites. Now, if you do not shop from any of their e-commerce partner’s sites, then you will not get those benefits despite repeated online shopping. Therefore, know these points before taking any card.

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