Tips on How You Can Compare Credit Cards
A Credit Card allows you to make purchases of goods or services on credit. It is issued by a financial institution, like a bank, which gives access to a line of credit. The cardholder pays back the amount, including the interest that the institution charges. It is one of the simple and convenient options to make payments with. There are numerous benefits of using credit cards, but it can lead to debt traps if not used within limits.
Features and Advantages of a Credit Card
- Welcome offers in the form of reward points, discounts, cashback offers, etc. You can use the reward points earned by using it against any charges or purchases.
- Lifestyle benefit offers on dining, shopping, entertainment, wellness, etc.
- Travel benefits such as offers on hotels, insurance on travel, airline offers, etc.
- Airport lounge access is available to holders of certain credit cards where the premium airport lounge can be accessed, and facilities such as dining in the lounge can be enjoyed.
- Add-on Credit Cards are available to credit card holders for their family members.
- Global usage of credit cards is offered by most financial institutions, where the card can be used all over the world by many merchants.
What are the Types of Credit Cards Available?
In India, there are many categories of credit cards that cause further confusion in choosing which to apply for. The following are the top categories under which credit cards can be grouped:
- Shopping
- Lifestyle
- Fuel
- Rewards
- Cashback
- Travel
How to Compare Credit Cards?
It causes quite a dilemma when it comes to choosing a credit card from the array of options available. Credit card comparison can be made based on the following points:
Interest Rate:
Obviously, you would like to choose a credit card with the lowest interest rate. But sometimes, you may see a 0% interest rate which may be only a window dressing gimmick. You must do thorough research and read between the lines to get a clear picture of what the bank charges for using a credit card.
Credit Period and Billing Date:
If you consider the credit period and billing date smartly while paying, the maximum credit period can be available. Suppose the billing date is the 5th day of the month; you must plan your finances to use the card immediately after the billing date passes. In this way, you will be able to avail yourself of a maximum number of days of credit until the next billing date arrives. Some people use two credit cards to alternate and use the cards smartly.
Rewards and Offers:
It is advantageous to use a credit card that has offers on travel and lifestyle such as offers in restaurants, offers on certain brands and stores, on a particular travel website or portal, etc.
Additional warranties or insurance:
Some credit cards offer extra warranty or insurance cover over and above the retailer’s offer.
Annual fees:
Some credit cards come with a charge which is called the annual fee. The higher the annual fees, the more the benefits, like reward points, airport lounge access, discounts on fine dining, and cashback advantages.
Tips to Follow When Applying for a Credit Card
The following tips can be followed when applying for a credit card:
- Credit Score: To get the lowest interest rate on a credit card, it is necessary to have a credit score of at least 750. A credit score lower than that may affect your credibility at the risk of getting rejected.
- Multiple applications: It is advisable to apply for only one credit card at a time rather than multiple applications. If a thorough study is done, it will be easier to choose and keep up a good credit score.
- Resources to conduct research: The source of information about credit cards should not be from one source alone. Instead, many resources should be tapped while also considering your requirements, lifestyle, spending habits, etc.
- Paying off Credit Card bill: Your credibility will rise if the dues are paid on time.
Debit Card and Credit Card Difference
Credit cards are safer when compared with debit cards. Debit Cards are financial instruments that, when used to pay for a purchase, debits the bank account linked to it immediately, with the purchase cost.
There is a threat of fraudulence when it comes to debit cards when we look at the differences between credit cards and debit cards. The Fair Credit Billing Act protects credit card users in case of unauthorized usage of their credit cards. In the case of a wrong debit card purchase, reversing the transaction will depend on the merchant’s willingness to do so.
Conclusion
Using a credit card in making payments comes with both pros and cons. Therefore, you must make your choice smartly by considering the advantages and disadvantages while also ensuring that your credit score is kept at the highest possible number.
