Home >Money >Personal-finance >Tempted to get a credit card? Here’s a checklist to pick the right one
Almost all credit cards offer reward points, but the quantum can vary. For instance, credit cards may give you 1 point for every ₹ 100 spent. Photo: iStockphoto
Almost all credit cards offer reward points, but the quantum can vary. For instance, credit cards may give you 1 point for every ₹ 100 spent. Photo: iStockphoto

Tempted to get a credit card? Here’s a checklist to pick the right one

If you use credit card smartly, you can get benefits in the form of convenience and even improve the credit score

Mumbai: The city’s skyline is dotted with hoardings of credit card companies, offering you great deals. Financial institutions also send their staff to corporate offices to sell credit cards. Here is what you should know you before fall for the temptation to pick a credit card:

Spending habit

Picking the right credit card can be tricky. Always know your spending habit before opting for a card. “It depends on your spending and repayment capacity," said Naveen Kukreja, chief executive officer and co-founder, Paisabazaar.com.

Cost of the credit card

Most credit cards have an annual fee and a joining fee. Some companies waive the charges in the first year. There are financial institutions that waive the fee if you spend up to a certain limit. “You need to consider fees and charges involved, joining or renewal benefits, expiry period, reward points and credit limit," Kukreja said. Evaluate whether the cost you pay for holding the card is worth it.

Deals and offers

Most credit cards come with discounts and offers, but not all of them make sense. For instance, if you are not big on watching a movie every week, a credit card offer or buy one-get-one-free ticket will be of no use for you. However, if you like to dine out, a credit card that gives you discount of eating out will make sense for you.

Reward points

Almost all credit cards offer reward points, but the quantum can vary. For instance, credit cards may give you 1 point for every 100 spent. However, the worth of one point in some cards will be 1, while in other it could be 40 paise. You should check the conversion option. You should also check if the reward points can be converted into cash easily.

Customer service

As we increasingly do digital transactions, we are more vulnerable to cyber fraud. In case of any fraudulent transaction, your first option will be to connect with your bank. Again, in case you have a problem with a transaction, you need to have access to your bank. Hence, it is important to check the service of the credit card company.

Things to remember

If you use credit card smartly, you can get benefits in the form of convenience and even improve the credit score. “But if you delay repayment, you will get hefty fine in the form of interest and it can impact your credit score," said Sachin Parekh, a Mumbai-based certified financial planner. Remember that the interest rate on credit.

Also read: How to close your credit card account, the right way

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