by In the case you are new to credit cards, then you may be confused. Note that there are various financial institutions providing numerous credit cards with distinct benefits and features. Among the different credit cards available to you, the best credit card in India depends on your personality and needs. Go through this comprehensive guide to zero in on the best credit card as per your preference.
Credit card – How does it work?
With credit cards, financial institutions allow you to make transactions on credit as well as repay the same later. A limit on a credit card is assigned and you cannot spend more than your credit card limit. Your credit history, job stability, income and various other parameters come into play in determining your credit card limit. Note that based on your preference, issuers tend to offer cards based on the category. For instance, best fuel credit card, lifestyle credit card, shopping credit card, rewards credit card, cash back credit card, etc.
Credit cards usually have an interest-free period ranging between 45 and 50 days. So, in the case, you clear your outstanding card dues in full by the due date, you would not require paying any interest constituent on the transactions that you performed. However, withdrawals of cash on credit cards have no interest-free period.
If you cannot afford to make payment of the overall outstanding amount on the card, banks give you the choice of paying the minimum balance amount and the remaining balance is rolled over. This unpaid outstanding money attracts finance charges or interest rates on a daily basis.
Let’s understand this with an example –
X comes with a credit card limit equaling Rs 1 lakh. His bank statement gets generated on the 20th of every month, wherein his due date is the 10th of next month with the interest rate on his card being 3.35 per cent per month. He has an outstanding unpaid amount equaling Rs 3,200 on his card, which he repaid fully on 5th October 2022. He made the following transactions using a credit card –
| Purchase type | Date | Amount |
| Dining | 17th October 2022 | Rs 500 |
| Shopping | 10th October 2022 | Rs 6,000 |
| Fuel | 7th October 2022 | Rs 3,500 |
| Grocery | 25th September 2022 | Rs 2,500 |
The finance charge on a credit card is computed in the below-mentioned way –
Rs 3,200 for twenty-one days (between 9th September and 5th October) @ 3.35 per cent per month = Rs 75.04
Rs 2,500 for ten days (between 25th September and 5th October) @ 3.35 per cent per month = Rs 27.92
The overall interest constituent that X would require paying would be Rs 102.96. His shopping, dining, fuel, and grocery would not levy any finance charges or interest rate as the overdue money is paid on 5th October 2022 already.
What are the pros and cons of using credit cards?
| Pros | Cons |
| Credit card is simple to carry as well as use, which is better than carrying massive cash physically everywhere. | Credit card has a high-interest rate, which can range anywhere from 20 per cent and 55 per cent per annum. |
| They are way better as the user has restricted liability in the case of fraud on credit cards. | Additional charges are linked with credit cards as annual charges, renewal charges, etc. |
| Credit cards endow you with additional financial planning. You can make use of them in events of cash crunch. | When you miss out on credit cards and begin spending a lot, a debt spiral begins. |
| Using credit cards, you get to earn while transacting in the form of cashback and rewards. | Credit cards are generally very costly for international use except for a few customised credit cards. |
| Several advantages are provided with credit cards like access to airport lounges, freebies, and gift vouchers in the form of milestone benefits. | Missed payments on credit card hold a direct impact on your credit score. |
How can you select the correct credit card as per your preference and choice?
From earning rewards to availing travel benefits, you can find credit cards designed for all kinds of needs and preferences. The choice of the correct credit card is based on the benefit you would want to avail. So, the initial step you must take is to decide on your transactions and general uses. In the case, you are starting your credit journey, then you may have just limited options. At times, you might get emails regarding pre-approved credit cards. If you feel the pre-approved credit card best matches your preference and need, then you may opt for the card. However, before this, ensure to check out the annual charges and other fees. Go for the credit card offering the maximum benefits and lowest charges.
Mentioned here are a few tips using which you can begin your search for an apt credit card –
- Review your expenditures to figure out in which category you spend the most.
- Be honest regarding your financial habits.
- Read about your credit cards and prepare a list of the top-class benefits you would want to avail.
- Beware of your budget.
- Do not fall prey to the advertised deals. Ensure you do your research properly.
Based on the above analysis, you must shortlist a few cards and check out the eligibility.
How to apply for a credit card?
Now as you have selected a card, the major question you that you have is – how you must apply for it. You must follow a standard method to choose the appropriate credit card.
Bank website –
If you have selected a credit card, you can visit the bank’s site and apply for it. Alternatively, you may even sign into your online net banking platform and apply directly.
Branch visit –
You can even visit the nearest issuer’s branch to place an application for the credit card in case you have zeroed in on any specific credit card. Ensure you take relevant copies of the documents like your address proof, identity proof and income proof. All these documents would be required for a successful credit card application process.
