These days, people are using credit cards a lot. Hundreds of credit cards from dozens of card issuers are available in the market. This leads to confusion among customers and a common question in front of them is, “What are the important factors to consider when selecting a credit card?” Below, we have provided some important things to know before choosing a credit card.
8 Things to Know Before Getting a Credit Card in India
- Cost of Credit Card
This is one of the most important factors to consider before selecting a credit card. You should remember that credit cards are not free. There are several kinds of hidden changes which include issuance fee, annual fee, late payment fee, cash advance fee, etc.
So, you should explore the variety of cards and compare them and choose one as per your requirement. It is recommended to pay off your full bill timely to avoid high-interest rate charges on late payment.
- Credit Limit
The second important thing to know before choosing a credit card is to check the limit of the card you are going to apply for. You can not spend beyond the limit of a credit card. Hence, while choosing a credit card, identify your financial needs.
In the beginning, you should go with a low credit limit and utilize the card accordingly.
- Your Income
You will have to pay your credit card bill, so you should have a stable income. You will have to fill in your income details in the credit card application form and provide income proof to the credit card issuer who will approve the credit limit based on your income.
So, make sure you have a regular/ monthly/ annual income to pay off the debt that you will be owed for purchases through credit cards.
- Reward points
With a credit card, you may earn reward points for each purchase. Some of the reputed credit card issuers provide attractive reward points on online shopping, fuel payment, merchant outlet payment and other payments.
Some financial institutions also provide shopping credit cards, fuel credit cards, travel credit cards and others. You can avail best rewards and offers on these cards. You should analyze your needs to choose an appropriate credit card.
- Customer Service
When you are transacting online through a credit card, there are the chances you may face some difficulties due to technical problems. In this case, you can approach customer support and resolve the problem.
Live chat support and on-call support are the most preferred and convenient customer support services. So, know about the customer service of the credit card issuer.
- Minimum Amount Due
In a credit card bill, there will be two options to pay the bill. One is to pay the full amount and the other one is to pay the minimum amount due which is a few per cent of the total amount. This is useful to keep credit active when you are short of cash. The banks charge high-interest rates on the rest amount which is carried forward. So, check the credit card interest rate and other charges on minimum due before choosing a credit card.
- Interest-free Credit Period
This is the credit period during which no interest is charged if the bill is paid before the due date. This period starts from the date of the billing cycle. Generally, the interest-free credit period ranges between 15-25 days.
If you pay the entire bill during this period then no interest is changed. If you do not pay the bill before the due date, the bank charges an interest rate for the unpaid balance, as per the credit card’s interest policy.
- Read Terms and Conditions
Terms and conditions contain important information related to credit card charges, reward points, APR and other important factors. So, you should read all the terms and conditions of the credit card you are going to apply for. It is an essential thing to know before getting a credit card.
In short, one can avail numerous benefits from credit cards, if used wisely. In contrast, improper use of credit cards can lead to interest charges and high penalties.