What is a Credit Card?
A credit card is a small plastic card issued by banks or financial companies to facilitate borrowing money for all your purchases. Furthermore, the cardholder agrees to repay the borrowed sum along with agreed upon fees or interest rates at a later point in time. However, you should always try to repay the borrowed amount before the grace period expires. This is to avoid high-interest rates getting accrued on your debt.
Which credit card to Choose?
Credit cards are offered in different categories such as Fuel, Cash back, Rewards, Entertainment, Shopping, Business, Lifestyle, travel etc. Which credit card you choose largely depends on your lifestyle needs and financial discipline. If you spend a good deal of money in travelling, it is smarter to have a travel credit card that would offer you priority check-in, excess baggage allowance, airport lounge access, air miles programme, a low foreign transaction fee etc.
However, if you want a credit card that you want exclusively for getting discounts on shopping or retail purchases, then you should apply for a card that offers discounts at retail outlets or particular stores. Similarly, if you are confident that you can pay off the money that you borrow every month, a card with a high Annual Percentage Rate should not bother you.
Get to know the fees and interest rates
Annual Percentage Rate or APR for purchases: This is the annualized interest rate that one has to pay along with the amount borrowed when credit card bills are paid after the expiry of the grace period. Let’s say a credit card has an APR of 42%. This means that a monthly interest rate of 3.5% is accrued on your debt in every statement cycle.
Annual Percentage Rate for debt transfer: If you have credit card debt, you can transfer that debt from one credit card to the other. While some cards would charge you a balance transfer fee in such a scenario, the others would not.
Annual Percentage Rate for Cash Advances: Unlike the purchases made on your credit card where the interest rate is accrued only after the grace period expires, you are charged an interest rate immediately after you have withdrawn money.
Annual Fee: The Annual Fee varies greatly among all credit cards. Depending on your needs, spending habits and income, you can choose a credit card.
Minimum Amount Due: This is the minimum amount to be paid on the outstanding amount, which is usually around 5% of the amount carried forward.
Foreign Transaction Fee: This is the rate charged on your transaction amount every time you carry out a transaction in a foreign currency. Some travel credit cards offer a lower interest rate, which is a boon for frequent travellers.
Penalty Fee: Penalty fees could be for late credit card bill payment, exceeding your credit card limit or due to failed credit card bill payments.
If you do not have a credit card yet, it makes sense to apply for a secured credit card (against a Fixed Deposit) and build a credit card history first. If not, you can become an authorized user by becoming an Add-on card member.
Documents Required to apply for a credit card
- You would need address proof ( Aadhaar, Voters’ id, Driving License etc.)
- Fulfil the age criteria ( 18 or 21 years and above)
- Salary or income documents
- You must be a Resident of India
Best Credit Card by Category
- Best Credit Cards in India
- Best Travel Credit Cards in India
- Best Business Credit Cards in India
- Best Entertainment Credit Cards in India
- Best Rewards Credit Cards in India
- Best Cashback Credit Cards in India
- Best shopping Credit Cards in India
- Best Credit Cards for Airport Lounge Access in India
- Best Credit Cards for Hotel Stay Offers in India