A credit card is essentially an unsecured loan. It provides you with access to a personal line of credit to purchase your favorite goods and services and pay for them later. There are so many variants of credit cards in the market. It may be tempting to sign up for any credit card that comes your way. But, not all cards are the right fit for you.
While banks try to woo their customers with maximum benefits and attractive offers, one should be wary of the fine prints associated with a credit card. If used correctly, credit cards may be a great financial instrument.
However, many people make mistakes while choosing a credit card, and end up in debt or damaging their finances. So, you need to think carefully before choosing a credit card. In this post, we list the questions that will help you pick the right card that matches your lifestyle and usage.
Why am I getting a credit card? How will I use it?
You definitely have to think about this aspect before applying for a credit card. Credit cards have different purposes; is it for your general household purposes? Are you going to use it mainly for fuel purchases? Are you a frequent flyer who is looking for a great reward program with an airline, hotel or online travel agent? Are you crazy about online shopping? Or is your main expense towards movies and entertainment? You need to narrow this down. Because, as mentioned earlier, there are so many different types of credit cards available in the market. Based on your spending pattern and spend categories, choose the one that best suits your needs.
What are the interest charges and other fees associated with the card?
A credit card is basically an unsecured loan. You don’t need any collateral or security to get a credit card. It is mainly offered to you based on your income and credit score. This obviously results in steep interest rates and a lot of other charges. There is a joining fee, annual fee, late fee, cash withdrawal fee, and so many more fees associated with a credit card. These charges are usually not fixed and depend on the amount you have utilized on your credit. So the more you use, the more are the charges. Having a clear idea of how much this credit card is costing you is essential while choosing a credit card.
