The usage of credit cards in India has increased in the recent years as it is not very difficult to get one and almost all the banks are providing credit cards.The marketing personnel from the banks may say they offer so many benefits in the card and can convince you very easily to get the card as they won’t talk about the hidden traps in the credit card. So if you decide to get a credit card, not only you have to choose the credit card but also should know how to manage it without paying much fees or other charges.
Before getting the credit card,compare the parameters (eg. fees) associated with the credit card between various banks and choose the one with maximum benefits.
Also check : Which are the Top 10 Credit Cards in India
Find the usage purposes of the credit card
Decide for what purpose you are going to use the credit card regularly. For example, if you are going to use the card regularly for putting petrol or diesel or any type of fuel,then it is better to get a fuel card so that you will get discounts or cash backs every time you use the card for refilling the fuel.Many banks like HDFC,Citibank etc offer credit cards which give 5% cash back on fuel at all petrol pumps in India.
Choose the right type of credit card
In India, the two commonly used types of card are Standard and Premium. A Standard or plain-vanilla credit is a simple and does not have any rewards or offers associated with it and have less fees whereas a premium credit card are basically gold or platinum cards having higher fees but also offers rewards , cash back,loyalty points etc. It is decided based on the income criteria of the individual.
Know your credit limit
Credit limit is the maximum amount available in the card for you and it may vary from Rs.15,000 to Rs.2,00,000 for most banks. The credit limit depends on the annual income of the individual who is applying for the card. If you are applying for the first time,it is better to have a lower limit card till you become comfortable in using the card.
Find out the grace period
A grace period is nothing but the amount of time available to you for paying the full balance in your card before the financial charge is calculated for the expense.It is usually calculated starting the billing date and most banks give a grace period of 30 to 45 days. So choose the card which has more grace period.
Annual percentage rate (APR)
APR is nothing but the interest rate applied to the remaining unpaid amount or balance after the grace period is completed.It varies with the banks and also the type of transaction.It can vary from 1.90% to 3.5% per month. Always go for the card with low APR.
Make sure you understand the finance charge calculations
Finance charge is the amount that is calculated using the APR and the unpaid balance.The calculation varies with the bank and it considers either one or two billing cycle,new purchases,previous month’s balance etc. Go of the card which considers many parameters before putting the charges.
Find out if there are any joining & annual fees
Joining fee is the amount charged for buying the credit card.Annual fee is the amount charged every year for keeping the credit card. It is usually fixed amount which is decided by the bank. Most banks does not take any joining fee.Check this point while purchasing the card.Also go for the bank that offers Zero or less annual fees.
Check for other undisclosed fees
Late fee is charged when you make the payment after the due date or the payment is less than the minimum balance.
Over the limit fee is charged when you exceed the credit limit of your card although most banks don’t allow to use the card if you exceed the limit unless for some specific reason.
Foreign transaction fee is charged by some banks if your card is used for a currency other than the Indian rupee. Usually it varies between 2 to 4% of the transaction.
Make sure you have enough information about all these fees above and other if any before purchasing the credit card.
Sign Up for Credit card Rewards
Gold or platinum cards usually have rewards program. They may be given as either cash back or reward points. The reward points are calculated every time you make a purchase credit card and you can redeem the points for some gift vouchers or shopping vouchers or purchasing an item. Choose the card which has good and useful rewards program.
Get the best deal from popular Credit card brands
HDFC,ICICI and Citibank are the popular credit card offering banks in India. HDFC has recently introduced a new credit card named ‘Infinia’ that does not have any credit limit which means you can make purchase for any amount.It offers exclusive cards for travel (Jetprivilege card),dining (Titanium times) etc.
ICICI offers exclusive card for fuel (HPCL Platinum), airline(Jet airways,British airways) etc. Citibank offers exclusive card for corporate companies (Citibank corporate) which helps them to maintain the travel & entertainment needs of the employees easily.
Check out the links to below to get an idea of all kind of cards by these banks.
Points to keep in mind before taking a new credit card in India
– Don’t have too much of cards. It will be difficult to maintain and you will be in debt.
– Don’t always pay only the minimum balance. Pay the full balance as much as possible as paying only the minimum balance will increase the interest amount calculated on the balance.
– Don’t use your credit card for all purchases as it will become a habit and will lead in more debt.
– Try to purchase after your billing date so that it will be reflected only in next billing cycle. For eg.if your billing date is 4th of every month and you make a purchase on 2nd, it will be reflected in that month itself whereas if you purchase after 4th it will be reflected only in next month bill.
– Check your minimum balance and pay above that to avoid late fee.
– Make the payment before the due date to avoid late fee.
– Don’t withdraw money using your credit card at any cost, as the interest is calculated every day and from the day you took the money.