What is a Credit card and How to Choose One to Maximise its Benefits?
A credit card is a tool that allows you to borrow funds from a financial company to put towards any expense such as buying your groceries or paying the EMI on your home loan. You get a certain time frame to return the money borrowed within which you do not have to pay any interest. If you exceed the time frame, you have to pay an interest on the amount borrowed.
Having a credit card allows you to carry a reduced amount of physical cash, which is easier and more convenient, and you can make larger purchases that you can pay for in instalments. You also get a number of incentives when you sign up for a credit card that can reduce your total expenditure. Expenditure means spending.
However, it is important to clear your credit card payment in full and on time, and avoid overspending to prevent accumulating debt, which can become large and troublesome over time. To maximise the benefits of your credit card, choose a card by following these parameters.
Choose a credit card based on your spending habits
Many credit cards offer incentives to distinguish themselves from the competition by partnering with brands. Using the card at these brand outlets gives you better benefits and rewards. So, search for a credit card that has partnered with the airline you fly with frequently, a chain of hotels you prefer or supermarkets you shop at.
Similarly, if you are an avid online shopper, seek a card that offers you accelerated rewards when you spend online.
Know the network where the card is accepted
It does not make sense to choose a credit card that offers better benefits at certain supermarkets, if those supermarkets don’t exist in your city.
Ensure that your chosen credit card is a part of your daily expense network and offers you reward points, cashbacks, and other discounts on each transaction.
Check the cashback and reward point system
Cashbacks and rewards are features of a credit card that make it truly lucrative. Typically, you can earn a certain percentage of the amount you spend when you use a credit card and earn a certain percentage when you pay a bill.
The reward points system then allows you to redeem accumulated points against the price of goods and services at partnered stores. With the Bajaj Finserv RBL Bank SuperCard, for example, you can earn up to 20,000 points as a welcome gift and earn exciting bonus points when you reach milestones.
Be aware of the interest payment and fees
In the event of being unable to clear the balance in full you will have to pay interest on the amount that is outstanding.
It is important to know the interest rate and fees associated with late payment before you apply for a card. Choose one with a nominal amount to safeguard yourself from paying exorbitant amounts.
The Bajaj Finserv RBL Bank SuperCard comes with nominal charges and you can save up to Rs.55,000 annually and gain accelerated rewards with each purchase.
Improve your credit score
Before you apply, ensure that you have a strong credit score. Doing so displays healthy behaviour with regards to finances, and issuers are likely to give you a higher credit limit or approval with ease. This in turn increases your purchasing power, the amount of rewards you can earn, and ultimately the discounts you can enjoy.
Using a credit card wisely can help you meet your financial goals such as getting a home loan, buying a property, or expanding your business. So, consider taking a credit card such as the Bajaj Finserv RBL Bank SuperCard that not only provides you with credit card features but also an emergency loan amount that is interest-free up to 90 days and can be repaid in 3 instalments.
Start by checking your pre-approved credit card offer from Bajaj Finserv and get a SuperCard to power your life.
Video – What is a Credit Card?