How to Choose the Right Credit Card for You?

There is no shortage of options when you decide it’s time for a new credit card. All it takes is one inquiry for the uncontrollable slew of emails, phone calls, and notifications urging you to choose a credit card.

At PaisaSimple, we understand how daunting it can be to choose a credit card—especially if this is your first or second card. Let’s look at the types of cards available, see what you should look out for when choosing one, and which credit card is best for you.

Some of the Different Credit Cards in India

There is a credit card for every category of consumer. Here are some common types of cards:

Rewards Credit Cards

These cards are designed to reward you for every purchase. The rewards points earned can be redeemed as vouchers or products from the credit card issuer’s rewards list.

Cashback Credit Cards

When you use these cards to make purchases, a percentage of the amount is returned as cashback.

Premium Credit Cards

These cards have higher credit limits and offer special benefits like airport lounge access, travel insurance, concierge services (tour booking, holiday packages, event planning), and exclusive rewards.

Travel Credit Cards

These cards help make your travel blissful. You receive air miles for every transaction. The air miles can be used to book tickets and upgrade your seats.

Co-branded Credit Cards

Some banks issue credit cards in partnership with airlines, retail stores, or hotels. You receive offers, rewards, or special access when you use these cards at the partner’s establishment or service.

Fuel Credit Cards

Usually co-branded with fuel companies, fuel credit cards offer reward points on fuel purchases from the co-branded company.

How to Choose Credit Cards?

There is no one-card-to-rule-them-all. Even if there is, your chances of getting one depends on several factors. Here are some steps for how to choose credit cards.

1. Check Your Credit Score

Your card eligibility with greater perks and features will largely depend on your credit score.

Check your credit score (a soft inquiry) before considering any card. If you have a lower score, check your credit report and identify the causes. Spend time improving your score to be bumped up for a better card.

Research the cards available for you, but avoid applying for every eligible card. This is because every application will result in a hard inquiry and negatively affect your credit score.

2. Identify Your Use Case

Figure out your essential use case and spending habits. Gauge the type of credit card you will need to fulfil your requirements. To help you better, ask yourself these questions:

• What are my significant expenses?
• Which stores do I shop in, or which brands do I shop from?
• How often do I travel?
• How much is my monthly fuel expense?
• Can I use this card to upgrade to a better card?

3. Compare the Benefits

• Once you know your credit score and identify your use case, it’s time for research and short-listing.
• If you’re a frequent flyer, choose a travel credit card or a premium credit card offering air miles, lounge access, and travel insurance.
• If you’re looking for the best credit card for daily use based on your everyday shopping habits, choose a rewards credit card or a co-branded credit card.
• If you want to earn rewards from all your expenses, choose a rewards credit card or a cashback credit card.
• If you want exclusive access to certain lifestyle, dining, and shopping perks, choose a platinum credit card.
• If you aren’t too keen on annual fees, choose a card with zero annual fees or one where the fee is waived for a minimum yearly spend.
• If you are a student and want to build your credit history, choose a student credit card.

4. Applying for the Credit Card

Once your comparison is complete, narrow your choices down to two cards. Apply for your preferred credit card at the bank or credit union. If you are rejected for some reason, contact the issuer for feedback.

Wait a few months to work on the feedback and reapply or apply for your second-choice card.

Conclusion

When there are so many choices on the market, narrowing down which credit card is best becomes a bit confusing. There is no one-size-fits-all option here. Figure out your priorities: the best credit card for daily use, for travel, for rewards, for cashback, or for exclusive perks.

How to choose credit cards boils down to your research and how best you qualify for a specific segment of cards. Don’t forget to compare interest rates, annual fees, and the credit network to maximise your new credit card usage.