As per TechSci Research, the credit card market in India is projected to grow at a CAGR of 25% between 2020 and 2025. Financial institutions and credit card companies are adding several features along with their existing products to encourage individuals to apply for a credit card. They are also marketing the same more aggressively not only in urban locations but semi-urban places as well.
Even though such competition has led to more lucrative features and benefits, it becomes challenging for the customers to pick a card that best suits them.
Hence, here are a few pointers that can help them choose the best credit card –
1. Consider your regular expenses
Credit card providers usually offer products based on specific expenses of individuals. For instance, a number of cards today are best-suited for online shopping. These offer rewards and benefits when cardholders shop from particular e-commerce platforms.
An estimated 330 million individuals will shop online in 2020. 71% of internet users will purchase products online this year.
Similarly, there are credit cards that deliver benefits for all types of online purchases, from grocery shopping to lifestyle goods. Moreover, such offers may or may not be subjected to specific departmental stores, allowing customers to procure goods from a variety of retailers.
Likewise, there are credit cards that cater to expenses originating from travel, movies, fuel, and more. Hence, individuals should apply for a credit card that pertains to their regular spending.
2. Compare the reward points offered
The primary benefit that credit cards provide and which customers look for is reward points. These points are usually available against every transactions. However, some expenses (like online shopping and grocery) can offer reward points that can be substantially more than that of those earned from other spending.
Not only transactions but reward points can also be earned when customers opt for a credit card or cross a milestone (sending a particular amount in a year or month).
Reward points can be redeemed for –
- Discounts on flight tickets.
- Discounts on hotel booking.
- Mobile recharge.
- Gift vouchers (online/offline retailers, brands, etc.).
- Customised gift, etc.
Hence, compare credit cards and check the rewards points on offer before picking the right product.
3. Take the joining and annual fee into account
The joining fee is a one-time charge that customers have to pay when availing a credit card. Usually, they have to pay the same charge every year as an annual fee to keep the card active.
Credit cards that come with more benefits usually have a high joining/annual fee and vice versa. Some cards come with zero charges, but applicants may need to have a specific income to be eligible for these.
In addition to the joining and annual fee, one should also consider other charges like reward redemption fee, foreign currency transaction fee, cash advance transaction fee, etc. while choosing the right credit card.
4. Compare the other benefits
Individuals should also check other benefits before they apply for a credit card. Some of these can be –
- Fuel surcharge waiver.
- Offers on movie tickets.
- Complimentary airport lounge accesses.
Some credit cards also offer industry-first features. For instance, the Bajaj Finserv RBL Bank SuperCard offers the provision to avail an emergency personal loan without any interest for up to 90 days. Cardholders can also withdraw cash from ATMs without paying any interest for up to 50 days.
Bajaj Finserv also brings pre-approved offers that make availing credits less time-consuming through a simplified application process. These offers are available on several financial products like personal loans, credit cards, business loans, and more. Individuals can check their pre-approved offers by providing only their name and phone number.
Such benefits have made credit cards a better option than debit cards for online and offline transactions. As of January 2020, there are more than 56 million active credit cards in India.
Individuals should consider these points before they apply for a credit card. They must also use their card responsibly to improve their credit score.