If you are new in the credit card market there are chances that you will be lured with the various offers that banks provide on the plastic money. Undoubtedly, a credit card is an instrument which makes the transaction process easy but if not used properly it can have damage on individuals credit score.
There is no one card which suits all the needs of everyone, the card which is great for your friend might not work the same way for you. There are varieties of credit card offered by the banks and financial institutions like lower interest rate, balance transfer and rewards programmer etc. It is important to select the CC carefully to avoid the damage at a later stage. Here are the 9 easy steps which will help you select the credit card:-
1. Why do you want a card?
A person needs to identify why they want a credit card. Whether you want to use the card for carrying a balance or for travel purpose. If your purpose is different from these then you need to look for a card which solves any of these purposes. Lenders offer cards which are specially designed for travel, shopping or rewards purpose. However, if you want a card to make daily transactions then you look for a card which offers a lower rate of interest.
2. Will you carry a balance
You need to determine whether you will be able to make the credit card payments on time. If a person is not able to pay the full amount which he/she owes to bank on or before the maturity date then banks charges interest on the balance. Usually, the bank charges 15% or more annually on the credit card balance. If you have any doubt that you may not pay the CC balance on time then you should go for a card which offers a lower interest rate.
3. How do you spend your money
The card should match your spending habits, so you need to determine your spending habits. For example, if you spend more restaurants and entertainment then you should opt for a card which offers more rewards on spending on dining and entertainment. Select the best card according to your needs after researching about them.
4. Which rewards are useful
Sign up for a credit card reward programmer of which you can make the most use. If you don’t have a car and you opt for a card which gives rewards on fuel transaction that will be of no use. Similarly, you have purchased a travel credit for air miles but do not travel that often then the card is waste. It is important for you to use rewards of a it is to enjoy the maximum benefit.
5. Which credit card is right for you
Once you have checked your spending habits, then it is time to zero down the types of credit card offered by banks which suits your needs. There are CC such as shopping, rewards, travel, student, balance transfer, business, cashback and fuel etc. Once you have selected the card then you should explore the market about the same cards.
6. Know the terms and conditions
Research in the market about the cards and which bank is offering a credit card which is custom made according to your needs. Once that is done, then you need to know about the annual fee, minimum payments, sign-up bonus, waiver annual fees on minimum spends and other perks. Compare the terms and conditions of all the CC which you have zeroed down.
7. Should you pay annual fees
There are few credit cards available in the market which do not charge annual fees whereas few does. You should do a calculation by comparing sign-up bonus, interest charges, and rewards and then determine whether paying annual fees makes sense or not.
8. Know the eligibility
Every credit card has different eligibility criteria so, you should know about the eligibility criteria of the card that you have selected. Some banks offer a credit card to an individual who is 18 years whereas few offers to people who are of 23 years. A credit score is also the most important factor in eligibility of credit card.
9. Apply for your card
The last step is to apply for a credit card which you have selected. The CC can be applied online or you can visit the bank, where the representative will help you with all the procedures. In the last step, you will have to submit all the required documents and the card will be sanctioned within a few days.
Conclusion: So, if you need a credit card then you should follow the above steps as it will help you getting the best card.