How to Choose and Apply for the Best Credit Card?

Last Updated : June 25, 2016, 10:07 a.m.

Choosing the best credit card requires careful consideration to align your financial needs and lifestyle with the features offered. So, start assessing your spending habits, as different cards cater to diverse categories such as travel, rewards, or cash back. Consider your credit score, as it significantly influences the cards for which you qualify. Research annual fees, interest rates, and any introductory offers or rewards programs to ensure they align with your financial goals. Pay attention to additional perks such as travel insurance, purchase protection, and extended warranties. It’s essential to read the terms and conditions thoroughly to understand any hidden fees or penalties.

How To Choose a Perfect Credit Card-What Factors to Look Out For

Below are the key parameters that you need to consider for choosing a best credit card:

Special Privileges on Credit Card

Credit cards from different banks cater to different needs of customers with special privileges on movies, dining, travel, shopping, fuel,  and others. It’s up to you to choose what kind of privilege you want to get. For example, if you are a cinephile who doesn’t miss to watch any movie on the big screen, then a card with the privilege of movie tickets for you would be the best, you must ensure that your card gives you benefits in this particular category. The same goes for someone who is an avid traveler or mad about dining outside every day.

Reward Points Program and Redemption

Each and every credit card in the current market is loaded with lucrative reward programs on every spend you make on different categories such as shopping, dining, groceries, entertainment, travel, and others. These points can be redeemed against gift vouchers and exclusive privileges. You have to check if the chosen credit card is giving reward points on the category you spend most. Also, keep a close eye on the validity of these reward points because it differs from one credit card to another, so remember to redeem them before they expire.

Choosing the Right Credit Limit

Credit limit on your credit card depends on your CIBIL score and monthly income. Chances of getting a high limit are high if you have a good credit score. A lower credit limit may have an impact on your credit utilization ratio, which should be 30% – 40% ideally. Choosing a credit card with a limit that suits your spending limit perfectly comes first, otherwise, you may end up exhausting your limit on a regular basis and your credit score will start to dip.

Easy Availability of the Credit Card

Availability is the one factor that you must consider while choosing the best credit for you because it may possible that the card you choose won’t be available to the city you are residing in. There are some credit cards that are only available to a few selected cities of India, and you must check if your residing city comes in the list.

Annual Fees

Some cards come with zero annual fees and some with a definite fee like ₹500, ₹1,000, etc. But these annual fee cards come with certain milestones such as waiver of your fee on spending a definite amount in a year. You need to see if you are able to achieve those milestones without changing your spending habits.

For example, if you’re getting your annual fee waived off on reaching an annual spending milestone of INR 5,00,000 by your credit card, but you can not spend INR 40,000 per month on an average with a monthly income of INR 35,000. Then this card will be of no use to you. So, it’s important to choose a card that suits your spending habits and repayment capability because everything you spend, you’ll have to pay it back eventually.

Ask Yourself Do You Really Need the Benefits?

Many credit cards these days come with many features and benefits such as free travel insurance, Air Miles, Dining, Cashback or Concierge services. It is you who need to decide whether you actually want these benefits or not. Depending on your needs or usage, you should decide which card is best for you among many available in the market. Are these benefits worthy for you? Will you be able to use these benefits completely?

Now you’ve known all the factors that you should look for while choosing the best credit for you. It may be possible that the chosen credit card may not have all the features but it should consist mostly of them. By assuring that, you will be able to enjoy your credit card journey the most.

Once you have decided which credit card to choose, the next thing comes into play is how to apply for it?

What are the Most Convenient Ways of Applying for Credit Cards?

There are the two most convenient ways that allow you to apply for credit cards .

Online

You can easily apply for a credit card while filling up the form available online. Follow all the instructions carefully as mentioned on the site, and fill your online application form.

In-branch

You can also visit the branch near you so as to apply for a credit card. In order to make this process more convenient, you can book an appointment earlier, and fill the application form to apply for credit card.

What if Your Credit Card Application is Rejected?

There are various reasons on the basis of which your credit card application can be rejected. A few reasons are – low income, poor credit score, multiple EMI’s running and many more. But, there is another main reason which is the CRA (Credit Record Agency) check. Yes, if your application is rejected on the basis of the CRA check, you can ask your lender the reason for rejecting your application, and you can even ask for a copy of your credit file from the agency by just paying a small fee.

Your credit file includes:

• Your Repayment History
• Financial Problems like Defaults Registered Against You
• Previous Credit Searches

However, if you find any inconsistency with it, you can even directly talk to the CRA as well as the bank so as to correct the errors and update the correct data.