How to Pick the Best Credit Cards
Fintra’s Mantra is here to assist and guide you in choosing the best credit card that’ll suit your wallet.
Well, let us first introduce you to a quote by a wise man, Tyler Gregory,
In our journey of assisting and guiding you to selecting the ‘BEST CREDIT CARDS’, the following topics will be covered:
- Brief Introduction to Credit Cards
- How do Credit Cards Function?
- Types of Credit Cards
- Finding the right Card for You
Brief Introduction to Credit Cards
That’s right. If we take care of the credit card, it’ll take extremely take good care of us and our pockets without drilling holes! Using it wisely will enable us to build good credit, save our money, and bring an array of benefits and privileges to enhance our daily living. If they’re used unwisely, it’ll make us suffer tremendously!
Fortunately, in today’s financial world we have choices of choosing the right credit cards! Here we will walk your way down on how can you select, finalize, and take care of your credit card.
Our relationship with credit cards could either be for a short period or a lifetime. Hence, before settling down for a specific one, we go through various checklists, the dos and dont's, and the pros and cons. Before settling down with one, which can be stuck on us forever, we have to analyze our financial habits and credit situations. There’re cards that offer rewards, travel benefits, shopping vouchers, discounts on various activities, no-interest periods, EMI options, business solutions, fuel surcharge waivers, and lots more.
Although you can change cards frequently, however, repeatedly switching them can be a hassle, especially if you've stored its details on online accounts and set up auto-pay using the card.
How do Credit Cards Function?
Whenever you use a credit card for purchasing something, you’re borrowing funds from the card issuer, the bank, to cover the purchase. Later on, you’ll have to repay those funds in full amounts by the end of the month or over a period of time. This cycle of borrowing and repaying keeps repeating.
Is there any limit on how much you can borrow? Yes. While finalizing a card, banks authorize a credit limit, the maximum amount one can borrow, to use at its discretion.
The credit limit depends on certain factors such as income, other debts, and how much available credit one has on other cards. The major payment networks are Visa, Mastercard, RuPay, and American Express, and they process credit card transactions. They also make sure the funds used for purchase reach the desired merchant and the correct cardholder is billed.
The best method to adopt for bill payments is to pay the full amount every month; doing so will get you a grace period that allows you to avoid paying for any interest on purchases. Your records of bill payments are reported by your credit card issuer to credit bureaus, who prepare credit reports. These bill payment record reports account for nearly 35% of your credit score, and this is an indicator of the risk factor of lending you money. Hence, it’s advised to pay at least the minimum by the due date every month to avoid late fees that can potentially damage the credit score.
Types of Credit Cards
Just like our world is filled with various types of elements, there are various types of credit cards as well in the world of finance- some of them include Rewards Credit Cards, CashBack Credit Cards, Airline and Hotel Credit Cards, Travel Credit Cards, Store Credit Cards, Balance Transfer Credit Cards, and Business Credit Cards.
Following are a brief description of each of the types:
• Imagine you’re getting rewarded for even the smallest things you do- you will feel on top of the world! That’s what happens when you get rewards credit card- it’ll reward you on every purchase you do. Just make sure no one gets to know what you’ve purchased otherwise we never know what awkward moment you’ll encounter with! Reward cards require you to have good credit.
• What if someone says to give them hundred Rupees for purchase and they’ll instantly give you half of the amount back. That’s what happens with cashback credit cards, a certain amount of your money will return back as a check or a deposit into your bank account. This method can reduce your outstanding balance!
• We all love travelling and if the cost is terrific, or at times free we’ll be on cloud 9! With free flights or stays at your favourite hotels who wouldn’t want to travel!? Such can happen if you opt for airline credit cards and hotel credit cards. Such cards reward you with miles, points, or freebies with a specific airline or hotel.
• With general travel credit cards you’ll obtain points and use them to pay for travel expenses.
• If you’re a shopping addict then the store credit cards would be your best shopping pal! It will reward you for loyalty by providing you discounts or other shopping benefits at the stores which provide the cards.
• When someone wants to consolidate credit card debts or reduce interest paid on existing debts, then a balance transfer card comes in aid.
• For the business owners there’re special business credit cards that are issued for making purchases for the company. 
Finding the right card for you
Moving on from types of credit cards let's focus on the next stage which is narrowing down your options. When it comes to credit cards, if you plan to be wise by paying your bills entirely every month then surely you would want to maximize the rewards you earn by frequently using your credit card. Hence, you should opt for a card that matches your spending styles. Various credit cards give bonus rewards points for specific kinds of purchases. Some of the categories might include:
- Travel purchases, such as hotels or airline tickets
- Fuel
- Groceries
- Restaurants
- Business spending
Now comes the most interesting part, finalizing. You’ve to review the key terms and fees. Be it any category, you’ll find various cards pertaining to it, so you’ve to compare the options carefully. The few key terms to scrutinize include:
- APR: APR refers to the interest rate that you’ve to pay if you’re carrying a balance. Some cards have low promotional APR for purchases or for balance transfers, and later on, the APR might increase after you've had the card for more than 12 to 18 months.
- Rewards: Credit card rewards tend to equate between 1% and 2% of your spending. Hence you might at times find more bonus rewards for specific categories of purchases, such as 5% cash-back on groceries or fuel.
- Minimum payments: It’s very vital to know how much balance is required to pay each month.
- Sign-up bonus: Various credit cards offer a special bonus when you meet certain requirements.
- Annual fee: Credit cards have certain annual fees. Don’t step back due to it because It may be worth paying it as it allows you to earn great rewards and perks to offset that fee.
- Other fees: It is also vital to know about the card’s foreign transaction fee especially if you are going to use it during your International travels. Also get to know the late fees just in case you miss doing a payment, the balance transfer fees for transferring a balance, or cash advance fees.
- Other perks: While narrowing down on a card you can also check if the credit card provides special access to concerts and event tickets, or any roadside assistance. Some cards offer rental car insurance or travel insurance.
One other thing you could do is check the credit card’s ratings and other people’s views about that particular card.
When your heart has come upon a few cards, it’s all exciting but doesn’t jump to a conclusion yet. Ask yourself what are the qualifying requirements. But naturally, you don’t want to put yourself in an unwanted position! Although you’ve found the card you love, it won’t add much value because what if you’re not eligible to have it based on your credit score. Hence it is crucial to know the qualifying requirements or the eligibility requirements for the card.
Alas! Finally, you’ve made your choice and ready to go for the ultimate credit card you’ve always dreamed of! To apply for the card, you can do it either online or offline. Once you have it, do not forget- ALWAYS TAKE GOOD CARE OF IT AND IT’LL PLEASE YOU IN RETURN!
