Published: Jul 22, 2021, 10:13am
With scores of credit card companies vying for attention in one of the largest consumer markets in the world, choosing a card suitable for your needs can be daunting. From SBI to HDFC and Citibank to HSBC, each card issuer has its very own list of benefits and value back offers. Knowledgeable navigation is therefore a perplexing journey.
Look at RBI data: As of March 2021, India with a population of 1.3 billion had 62 million cards in force i.e., five cards per 100 persons. This accounts for very low penetration in India making the market fiercely competitive when it comes to new customer acquisition and the choices for a consumer difficult.
Featured Partners
1
ICICI Platinum Chip Credit Card
Annual Fee
Nil
Welcome Benefits
None
Key Feature
Fuel surcharge waiver
On ICICI’s Website
2
IndusInd Bank Legend Credit Card
Annual Fee
INR 9,999 + GST
Welcome Benefits
Complimentary hotel stay (Oberoi Group)
Key Feature
Luxury
On IndusInd Credit Card Application
With a fair credit score starting at more than 650 and a regular monthly income, you can conveniently qualify for an all purpose entry level credit card with your preferred bank. Premium features do come with additional costs. Let’s understand how you can use a credit card wisely in seven steps.
Before exploring credit card options for yourself, you must first understand that there is no ‘one size fits all.’ You cannot mimic the spending pattern of your best friend.
The first step is to analyze your own items of expenditure and to pick a card that is best aligned to your own lifestyle. Go through the following checklist and answer each question to assimilate what and where you intend to use your card.
Annual Fees: Other than zero-fee cards, all credit cards have a non-refundable annual charge. You may find a premium card at zero joining fee, it is likely that there is an annual fee second year onwards. There could be a fee waiver on achieving spend milestones.
Interest Rate: Credit cards should be leveraged to avail free credit and certainly not to shoulder exorbitant (24% to 48%) interest costs on rollover dues. So, relatively lower rates should form an integral part of your decision making matrix.
Late fee: Delays in bill payments attract a penal fee. Examine the MITC document and try to minimise any future costs.
Foreign markup: Swiping your card overseas comes with a foreign currency mark-up fee, generally between 2.5% to 4%. The mark-up rate is disclosed in the terms and conditions. YES Bank First Exclusive Card offers one of the lowest mark-ups at 1.75%.
Grace Period: For payments, each card offers a grace period beyond the due date without any additional charge. Check and remember the grace period.
Rewards Program: Examine how to maximise rewards on the card spends. Check for expiry of reward points, and also determine the operative redemption process. Especially, if there are extra fees for claiming redemption benefits. Few cards can also offer redeeming points against annual fees.
Other Benefits: Credit cards can dazzle & confuse you with a bewildering bouquet of benefits. Fully internalise terms and conditions for all value-back and add-on benefits, which may include complimentary insurance, fixed or time bound partner programs i.e. frequent flyer miles, vouchers etc.
Credit Limit: This is the maximum amount that you can spend on the card. So, your monthly expenses cannot exceed the sanctioned limit. Building good credit history, will lead to higher spending limits, and will lift your credit score.
Before taking a final call, however, it is recommended to look at some issuer specific benefits. These could be unique benefits that only a particular issuer offers to its customers. For instance, if you have very frequent rail travel, you may like to consider a card such as the SBI IRCTC Card.
New users can commit errors in plastic usage, sometimes very costly. Prevention is always better than cure, a few tips:-
Best Credit Cards In India 2022
When it comes to credit cards, these are best suited based on one’s needs. We’ve put together a list of best credit cards to help our readers compare and select a card that suits them the most.
It is a common perception that credit cards lead to a debt trap. On the contrary you can better manage expenses with multiple credit cards. Let’s discuss how you stand to benefit with two to three cards.
If you have Card 2, you can avail longer interest free periods. Make sure, Card 2 has a billing date in the middle of the month. The idea is to keep 15 days’ gap between the billing dates of the two cards. To execute in our example, use Card 1 from 1st to 15th of each month and switch to Card 2 for the expenses made between 15th and 30th.
Future planning in the timing of spends on multiple credit cards will help extend interest-free periods.
It is a universal aspiration for parents to desire the very best for their progeny. Whether they ripen as successful professionals, musicians or sportspersons, children will always be required to manage finances adroitly. And a credit card can be one of the first tools to impart financial lessons for future leaders.
In selecting the right credit card, you may of course discuss with friends who are at a similar point in their life cycles, and also with bank officials. Your own research however, is the overriding attribute. Thoughtful & judicious handling of a credit card offers flexibility and benefits which will surely lift your lifestyle.
Raj Khosla is founder and MD of MyMoneyMantra.com. He has three decades of experience in the banking and financial services space where he has worked on creating awareness on financial investments and offered tailored-financial products to Indian customers and small businesses.
Armaan is the India Lead Editor for Forbes Advisor. He has more than a decade’s experience working with media and publishing companies to help them build expert-led content and establish editorial teams. At Forbes Advisor, he is determined to help readers declutter complex financial jargons and do his bit for India’s financial literacy.