Choosing the Right Credit Card: Key Factors to Consider

Life comes with challenges where we are unaware of what will happen next. Not everyone is blessed with people ready and capable of covering urgent expenses. Relying on yourself is among the wisest options. Credit cards help you become independent in such times. 

The credit card provides you with money when needed that can be repaid later with additional interest rates charged by the bank. Credit card apps further allow easy information management in one place. The cards come with multiple features and offers. You must choose the right credit card that fits your choices. The article comprises the key factors to consider while choosing a credit card.

Considerable Factors While Choosing the Credit Card

If you plan to avail your personalized credit card, here are some factors you must consider.

  • Credit Score Requirements

Credit score plays a crucial role when applying for a credit card. It helps to get better offers and influences your odds of approval. Every lender provides credit cards based on the different credit score ranges. The better the credit score, the more offers you will receive. Here is the credit score range determining your type of credit card.

  • Poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Exceptional: 800 to 850

Having a bad credit score or errors in your credit history can downgrade your profile. It is advisable to increase creditworthiness and manage the score before applying for a credit card to avail best deals. Check the updates in your credit score via the credit card app.

  • Usage and Lifestyle

You must apply for the credit card based on your requirements. Here are some examples for your guidance.

  • If seeking a card for regular purchases, choose flat-rate reward credit cards.
  • Frequent travelers abroad must choose cards that do not impose foreign transaction fees.
  • If you are willing to finance a huge purchase, choose credit cards that offer installment-based payments with time with no interest for the intro period. Choose an introductory 0% annual percentage rate for the same.
  • Seeking a card to consolidate prior high-interest-rate debts? Go for a balance transfer credit card that offers lower interest rates. If the bank offers 0% APR then it is a plus.
  • If you love trips, choose travel reward cards that provide hotel or airline rewards. It eases your journey at lower costs.
  • Sometimes, users want to make efforts to maximize their rewards. Choose credit reward cards that provide complimentary bonuses.
  • Applicable Fees

Regardless of the payment of interest, the credit card comes with several fees. The following points may aid in managing your finances.

  • Balance transfer fee: Banks impose a 3% to 5% balance transfer fee on your credit card. It is advisable to choose the credit card option, which provides a lower balance transfer fee.
  • Annual fee: You must never choose credit cards with an annual fee until you do not spend using a credit card and claim benefits. With the increase in benefits and rewards, the annual fee payment is worth paying or even canceled.
  • Late fee: Choose credit cards that have as minimum late fees as possible on delayed payments. Credit cards without late fees are rare, and hence, it is the only available option. It is advisable to keep your payments on schedule terms and be updated through the credit card app to avoid late fees.
  • Foreign transaction fee: Choose credit cards that do not charge foreign transaction fees while shopping online or purchasing goods or services from outside the country.
  • Reward Programs And Loyalty Points

Credit cards offer several reward programs for eligible purchases. Your points increase with your expenses. Often, cashback rewards and loyalty points are valid for specific purchases. Keep track of your rewards and points. Thus, consider credit cards offering better rewards so that you can use them rather than spending money.

  • Annual Percentage Rate

The Annual Percentage Rate (APR) is charged yearly as an interest rate on your debts. If you do not have dues to repay, the annual percentage rate will not be charged. The rate depends on the percentage of debt you owe. When applying for a credit card, choose a good APR offer. The interest rate is lower than the average credit card interest rate.

  • Interest-Free Cash Withdrawal

Some credit cards allow you to withdraw cash via ATM but charge a huge amount of interest rate at the same. Nowadays, credit cards with no withdrawal fees are available. Choose a credit card supporting interest-free cash withdrawal.

  • Credit Limit 

Your credit limit completely relies on several factors like your creditworthiness, credit history, relation with the card issuer, and similar others. You may not know your credit limit until you apply for finance and get approved. Before applying, maintain your creditworthiness and stay updated using the credit card app for free.

Frequently Asked Questions 

Q1. What are co-branded credit cards?

Ans. Certain brands collaborate with card issuers to generate co-branded cards. For instance, popular hotels and airlines. Individuals can use such cards to get rewards from the corresponding companies for their expenditures.

Q2. How to boost your credit score?

Ans. Utilize your card for your utility bills, rent, and other expenses. Additionally, clearing dues on time can increase your credit score and help you to maintain a good credit history.

Q3. Is there any borrowing limit on credit cards?

Ans. Distinct lenders provide different limit ranges. It completely relies on your credit history, credit score, and regular income.

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