Monday, March 9, 2009

HOW TO CHOOSE THE PERFECT CREDIT CARD ?

Friends, with so many companies offering so many different credit cards with so many different features that the customer gets confused as to which one is really suitable for him. While most of the credit cards are same in basic features , they do differ from each other on things like interest rate charged,credit period, add on features, co branded offers etc. So to make your job of choosing a suitable credit card for you easier, I am listing down few do's for you:

1.Credit Card with "No Annual Fee" - Annual fee is the fee charged by credit card companies annually to offer you credit card . This is fixed fee and is not dependent on your spends and hence is fixed cost for you. There are quite a few credit card companies which offer you credit cards at 0 annual fee. Always choose credit cards which do not charge you annual fee so that you save money on this and your charges are spend based.

Example - ICICI Credit Cards, HSBC Premier cards etc.

2.Credit Card with "Low Interest Rate"- The general rate of interest charged by credit card companies can vary quite a bit and the difference between the one charging lowest rate of interest and the one charging highest rate could be as high as 8-10% pa. That's quite a huge margin and hence one should always do some research and look for credit cards with lower interest rate. This is very vital as most of your charges are going to be on spends and interest charged and higher interest rate will really hurt you in the long run.

Example-Amex International Gold Card,BOI Domestic Visa Card etc

3.Reasonable Fees- Credit card companies charge the users various fees like late payment fees,cheque dishonour fee etc which varies between company to company. Thus its only wise to look out for cards which have reasonable fee structure as compared to others in the market.

Example- SBI Cards, Allahabad International Card etc.

4. Co-branded Cards for petrol/shopping etc- Co-branded cards are the cards which are issued by credit card company in collaboration with another company. These cards offer additional benefits to the users. For example, ICICI HPCL card is a co-branded card between Citibank and HPCL. HThis is good for people filling petrol through credit card as they get extra rewards points and also no transaction fee on these cards. People who love to shop a lot with credit cards can opt for co branded card with a retailer .For example Citibank has co branded cards with Shoppers stop offering unique benefits to the shoppers at Shoppers Stop. So depending on your usage pattern, you may choose these.

5.Card with "Liberal Reward Point System"- Always look out for cards which offer better reward points on usage than others. The extra reward points might help you pay part of your outstanding on card by redeeming the points. This will lead to savings and hence is beneficial.

6.Cash Back Credit cards- There are quite a few companies offering credit cards with "Cash Back" offer. A cash back offer is one where the user gets credited a part of his spend(usually 5%) back on his card . This is like getting a discount of 5% on your spend from the card company.So,if you get this then grab it.

7.Credit Cards with"O Transaction fee on Cash withdrawl"- Credit card companies discourage people to withdraw cash and hence usually levy a heavy cash withdrwal charge over and above the normal rate of interest. This leads to jacking up the effective rate that the user pays on the card for cash withdrawl. But there are cards which do not charge you this fee. So go for them.

Example-BOB Cards, Corporation Bank Cards, Thomas Cook Card etc.

8. Cards with "Minimum Liability on Lost Card"- If you loose your card then the liability of any misuse on the card till you report its loss to the card company , is generally on you for most of the cards. But few cards in the market limit your liability to a minimum amount which wont hurt you and hence gives you your peace of mind. This is a huge benefit and your card must have this.

Example-UTI Bank Domestic Gold Card.

So, next time you receive call from one of the telecallers trying to sell you a credit card, ask them these questions and then decide whether you want to take the card or tell them not call again.

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