Credit cards are popularly referred to as plastic money as they are miniature cards allowing freedom to spend and yet, not use cash. As the name suggests, credit cards will enable the cardholder to purchase freely within the defined credit limit. The cardholder pays either in full or the minimum due as a percentage of the borrowed amount, on or before the pay-by-date. The cardholder must factor in the inordinately high-interest rates levied on the outstanding balance for paying partially. Thus, choosing the ideal from the abundantly available is no cakewalk until you compare credit cards.
Cardinal points to compare credit cards:
The demand for credit cards is enormous, and issuers, especially banks, offer a clutch in their bouquet. Most issuers offer credit cards in various types like silver, gold, platinum, or titanium, and their features and benefits differ widely. Without a doubt, credit cards are a common financial product catering to every spending category. However, prudence is best served by looking into the following:
Fee and Charges:
Issuers recover a host of charges for every credit card category in their portfolio. Apart from the interest rates to factor in, the cardholder must check on the compulsory issuance, renewal, and cash withdrawal fees.
The credit card type is issued based primarily on the applicant’s income, coupled with a few other factors. The credit limit is also a critical component allowing unrestrained spending freedom.
Compare with the Comparable:
It is cardinally essential to fix the parameters for a meaningful comparison. However, various portals and apps are amply equipped to help explore different credit cards in the market.
Dodging points to compare credit cards:
Every issuer employs multiple taglines to entice potential customers to their products. However, a sensible individual will see through the ploy and read the fine print before making an informed choice:
A range of attractive benefits is rolled out to attract a potential customer initially. However, they could turn out to be costly in the long run after the offer runs its course. Therefore, the customer must not lose sight of the critical features before homing in on the chosen credit card.
The issuer determines the individual’s credit limit depending on the income and creditworthiness. However, often the customer falls for higher credit limits that may eventually lead to a debt trap. Therefore, sensible choice of the credit limit and measured use of the card is critical to its ultimate efficacy.
Top five tips for comparing credit cards:
The digital scenario has equipped the customer with a rich online resource to compare credit cards from the sea of products in the market. However, while the issuer is proactive in tapping prospective customers with tempting offers, the customer must act prudently. The following tips hold the customer in good stead.
Credit Card Category:
Not every credit card is suitable for the individual’s needs. Choosing the right card is crucial for a seamless experience. Compare credit cards to match specific needs. For example, a frequent traveler may choose a Traveler’s credit card, while another may choose an E-commerce card.
Credit Card Type:
The card type offered is based on the customer’s income and credit history. Titanium or a Platinum card provides various features and is vastly different from silver cards with limitations. Choose the card matching one’s eligibility.
The credit period is a vital component, often acting as the clincher. Usually, the interest-free period is a month or extended up to 50/55 days. Since the monthly billing date is fixed for an issuer, the credit period enjoyed depends on the purchase or spending date.
Most issuers quote the monthly interest rates, which appear reasonable initially, but are deceptive when considered annually. Moreover, interest is levied from the purchase date on the outstanding balance if paid partially. So read the fine print and choose a credit card with a low-interest rate.
The cardholder earns reward points on the card transactions, and every issuer offers a program based on the spend category. Check for the highest reward point per rupee transaction to accumulate, and redeem various gifts and benefits.
For the individual customer, the best option is to compare credit cards based on the earned knowledge to meet the challenging prospect of selection. Credit cards are vital in today’s financial scenario. The use of plastic money is an alternative to carrying huge wads of cash. Therefore, prudence and meticulous groundwork before choosing the credit card aligned ideally for the individual’s needs are vital.