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How to select the right Credit Card

Decided to go in for a credit card? But not sure how to select one? The proliferation of cards in the market would simply clutter the process of choosing. You could, ofcourse, choose to go with whatever comes your way, or whatever your friend recommends, but if you atleast want a sense of some of the questions to ask, and tricks that you could check to get a better deal, read on.

Throw up the following questions to decide on the right Credit card :
1. How much is the joining fee and the annual fee?
Generally, a card with a higher annual fee enjoys more benefits like higher credit limit, higher accident insurance cover, accessibility to airport lounges, travel discounts etc. Or atleast this used to be the case. With cut-throat competition between the card issuing banks, players are ready to waive joining fees and also one-year membership fees for anyone. Grab these offers, or negotiate this for yourself.

2. How much is the Add-on card fee?
If you are interested in buying add-on cards for your children, spouse or friend, ask for the add-on card fee. Remember that you will be settling the bills on the add-on card that you so touchingly gift to someone dear to you - the statement will come to you, and the responsibility for payment is yours (as far as the credit card company is concerned)

3.What is the interest rate?
This is actually a question that you should be asking fairly soon in the discussion.
Remember, while the upfront one off fees are bread and butter for the credit card company, this is the jam! If you're the sort who forgets to pay on time, or likes to live it up and live off credit, the interest rate would be of paramount importance. Most credit card companies charge anywhere between 2% to 3 % per month. (Read a whopping 35% to 43% per year). That's where they make their gravy, and that's where you pay!

It is always advisable to pay off the entire amount on due date, or, if you have a large bank balance, look for card companies that provide the transfer balance facility. The balance transfer rate is lower for a certain period (say six months) and then the normal rates apply. But again this is a temporary solution to a chronic problem.

4. What is the reach?
Not an important question - most outlets in India accept both the Master card and the Visa card, and most credit card companies provide Visa or Master cards. So its fairly simple, and doesnt need much head scratching - they're all more or less the same. One thing you could do is to check out for the Automated Teller Machines nearest to your house or work place(ATMs - almost all credit card companies now provide you the facility of withdrawing cash from machines - I guess for things that cards just cant buy. These machines are called ATMs, and are helpfully scattered all over the city/country/world.).
Having more ATM outlets in Thailand wouldn’t be of any relevance to a person who rarely travels abroad, though it may certainly be a goal to work towards after buying the card. Please also remember that Amex credit cards are not part of the Visa/ Master chain, and have a separate chain of outlets where it’s accepted.

5. Is it a Global card?
Now this could be useful to you if you are an overseas traveller. A Global card can be used for paying expenses in foreign currency just like you use a credit card to pay in rupees. Nowadays, a Global card is being issued at the same cost as for a similar domestic one. It is better to have a global card, especially if there is no premium attached.


6.How useful are branded or affinity cards?
A partnership between a card issuer and the non-profit, social or lifestyle association is what results in an affinity card. This is for providing financial rewards to the group or association. E.g. Citibank Women’s card, Citibank WWF card. Citibank WWF Visa card donates a percentage of the transaction value made through the card to the WWF fund for its environmental conservation activities. A subscription to such cards helps ease the conscience though it provides no monetary value.
A partnership between a bank card issuer and a commercial partner result in a co-branded card. This entitles the cardholder to lots of freebies, prizes, discounts on co-branded products. Logic: If a customer is loyal to one brand, he will want to purchase the other. So if you were loyal to a particular brand, it would make sense going for those co-branded cards. For e.g. Citibank and IOC, Bank of India and Taj group of hotels etc.
7. What`s the lost card liability?
Most Card issuers mention in the brochures that lost card liability is Rs 1000. Be careful, that is actually AFTER it is reported to the Bank. The liability is actually unlimited before reporting (in cases like this, you would actually thank the credit limit because though the liability is unlimited - the ceiling should logically be your credit limit, and the outlets accepting your stolen card should actually check that you (or the person who stole your card) havent exceeded your credit limit).
Avoid banks that makes you liable for card misuse for a single minute after reporting it.

8. Are there any freebies?
Citibank gives a Pond’s gift hamper free on subscription to its Citibank Women card. Personal accident insurance for Air, Road or Otherwise is packaged along with the subscription. Also Baggage cover, Purchase Protection cover and credit shield is bundled free of cost along with the card.
If you feel one these parameters are important, then settle for the one that gives a higher cover.

9. Is immediate cash withdrawal possible?
Check out if the Bank has any ATMs near your house or workplace. This surely helps in times of emergency.
The cost component for a cash withdrawal could be classified as follows: Service fee (transaction fee) each time you pull out money, and Interest rate for the period for which you have used the money - until settlement date. If you are going to withdraw cash frequently, better watch out for this cost.

10. How long is the free credit period?
The days of credit one gets depends on the statement date and the date of transaction. On an average, you could assume you'd get around 20 days of free credit. However, if you buy just after the statement date, you could end up getting upto 50 days of credit. Look for cards that give you the highest free credit period!

11. Is a Helpline available?
A 24-hour Helpline service from the Card Company helps the cardholders during the non-banking hours. Reporting of theft, checking of available credit limit and other enquiries can be made by the cardholder round-the-clock. In the end, like everything else in life, the card you want is really up to you - what matters the most to you - credit, reach, the freebees, international reach or a combination of parameters. Use our card category on the left bar to simply list out the names of the cards, or choose by bank name and see the cards they offer. Or look for cards offering the lowest interest rate. Ot the lowest charges on cash withdrawal (believe me, it gets to be a serious consideration as one goes along). Go to our shortlist card section, and search for cards based on any criteria that you want. Happy hunting, and stay careful - you may like to use our section on how to use the card carefully to minimize the chance of its misuse by someone else.


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