Are Indians Choosing the Right Credit Cards?

Everyday, more and more Indians are getting credit cards giving them a new means of purchasing power. Are they selecting the right credit cards though? Not every card is meant for every person. Some come with very high fees, some are only good for travelers, while others are good for people who like to eat at restaurants. Essentially you want the card that fits your lifestyle and will give you most reward points for your spends. Choosing the right card can save you thousands of rupees every year. Below we outline the steps you should take to choosing the best Indian credit card.

1. Identify How Much You Spend

A misconception about credit cards is that you need to spend a lot of money for them to be worth it. In actuality, low spenders can find just as much benefit in credit cards as low spenders. The problem being some credit cards come with high fees. If you getone of those cards, you need to earn enough rewards points to offset the cost, and to earn enough points, you need to spend more money. Luckily, there are many great cards with low fees that low spenders can apply for. With these cards you do not have to worry about spending enough to cover the expense of the annual or joining fee. 

 2. Identify the Type of Spender You Are 

Credit Cards can specialize in certain categories such as travel, shopping, dining, fuel and many more, and this makes sense. There are people who travel for business who can end up spendings thousands of rupees a month on airplane tickets, while there are people who can end up spending thousands of rupees on clothing. Fortunately, credit cards are tailored toward different areas of spending. There's a card for the frequent flyer just as there is a card for the frequent shopper. Once you identify your preferred categories, you need to choose a card that also fits them.

 3. Identify the Kinds of Rewards You Want

Not all rewards points serve the same function; many times it depends on the type of card. Spends on travel credit cards for example earn the cardholder "miles" instead of points or cash back. Jet Airways cards reward you JPMiles, while British Airway Cards reward you Avios, which can be used to redeem free flights. Most cards however will reward you points that you can use to redeem items on the card issuer's catalogue. For example, HDFC issued cards have their own online catalogue, the same with SBI, HSBC, American Express and Citibank. In most cases, issuers also allow you to trade in your points for cash with an average of two points being 1 rupee. Other cards don't even give you points but rather direct cash back. The cash back is usually a percentage between 0.5 and 10% of your purchase.

4. Applying for the Card

Determining all of those factors may be hard to do without all of your options available for you to see. Luckily, New York based personal finance company ValuePenguin has created a calculator that allows you to sort through over 100 different credit cards based on your spending habits. Rather than an arbitrary list, the calculator shows the net two year value of points earned from each card based on your spending inputs across eight different categories. Once you determine which card best fits, you can apply directly off of the calculator

Source : articlesbase.com