Finding the right credit card is a challenging task, especially when it’s your first time. Choices are plentiful. Each card comes with unique features, benefits, and conditions, which makes it even tougher to find the one that’s right for you. There are cards that have zero annual fees, less of a credit limit and only basic features. On the other hand, there are cards that come with a long list of exclusive benefits, charge high annual fees, and offer higher credit limits and rewards.
There is not a single card that’s better than all other cards in all possible categories. That’s why it comes down to understanding your requirements and your spending habits. Only when you know what you need from your card will you be able to find the right one. Here are aspects that you need to consider before buying a card.
Know the different types of credit cards available
To know which card is right for you, it’s important to understand the different types of credit cards that are available in the market.
Standard credit cards: These are basic credit cards with limited benefits and a low credit limit.
Rewards credit cards: These cards offer special benefits and incentives for making purchases with the card. The points you earn for every dollar you spend can be redeemed for rewards. There are different types of rewards credit cards:
- Travel credit cards: Travel cards are designed specifically for frequent travellers. These cards let you earn points which can be redeemed for travel benefits. More often than not, there is an annual fee on these cards.
- Cashback credit cards: With these cards, you can earn cash rewards for making purchases. The amount of cashbacks you can earn depends on the money you spend on your credit card. However, sometimes there is a limit on how much you can earn in cashbacks each month. It works perfectly for those who can pay off their balances in full every month.
- Retail credit cards: These cards let you earn reward points for making purchases at select retail outlets. At most times, the points you earn with these cards can be redeemed at those retail stores only.
- Fuel credit cards: If your fuel expenses are very high, consider this option. Fuel/petrol credit cards reward you for making fuel purchases at the bank’s partner fuel stations.
Premium credit cards: As the name suggests, these cards offer exclusive benefits and rewards. Premium credit cards usually offer higher credit limits, along with various other exclusive benefits such as travel insurance, a 24/7 concierge and much more.
Secured credit cards: If you do not have a good credit score, this could be a good option for you. These cards require you to deposit a security amount, which also becomes the credit limit for your account.
Specialty credit cards: There are cards that are designed for people with unique needs, such as working professionals and students.
Know your spending habits
Once you know the different types of credit cards that are available, narrow down your choices by answering the following questions:
Are you buying a card to get better shopping deals? If that’s the case, you need to check out cards that offer cashbacks and rebates on shopping.
Are you going to pay off your balance every month? If yes, you can look for a rewards card that will allow you to earn points on travel, fuel, shopping, etc. However, if you are not sure about paying off your balance every month, you should look for a card that charges a lower interest rate.
Are you a frequent traveller? If yes, you should definitely get a travel credit card to maximise your travel experience. Travel cards allow you to earn air miles, room upgrades, limousine transfers, travel insurance and much more.
Are you going to use your credit card for everyday grocery shopping? There are cards that offer special cashbacks on grocery shopping. Make sure you pay off your balance in full each month to avoid paying interest charges.
Compare the card interest rates, annual fee, and features
This is the final step towards finding the right credit card. After you have answered all the questions mentioned above, you should be able to narrow down your choice to a few cards that match your requirements. All you have to do now is compare the interest rates, annual fee, and features of those cards to know which one offers you the best value.
