Credit Cards and You

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Credit Cards which are essentially unsecured loans are becoming increasingly popular in our country. The use of plastic money is becoming more and more common in most transactions and we see that banks are introducing new options and variants of credit cards in frequent intervals. Banks are also offering credit cards for different target segments - like the salaried class, businessmen, housewives, for women, for doctors etc. The huge variety of cards on display usually leaves one confused and overwhelmed, not knowing which is the best option for him. We have analyzed a few cards in the market offered by various banks. Before we look at the features of some credit cards, let’s look at what needs to be kept in mind while deciding on a credit card:

Interest rate: Interest rate is not very important if you intend to pay your bills before the due date. But as human beings, there may be situations when you miss the due date unintentionally. In this scenario, it is important to consider the interest rate charged, as these are very high compared to conventional loans. Further, if you continue paying only the Minimum Amount Due, you will soon realise that you have got yourself into a debt trap, as the outstanding amount balloons out of proportion faster than you think.

Charges: Watch out for the initial joining fees and the recurring annual fees on the card. Other charges and penalties also need to be carefully analyzed before zeroing in on a card. Despite banks divulging all the information in this regard, it is often seen that customers either do not understand the implications or simply tend to ignore them. Do not hesitate to understand the meaning of all possible charges and fees before you sign the agreement.

Rewards, discounts and offers: Benefits offered by credit cards differ according to the card. They are either in the form of discounts or cash back offers or freebies or rewards. Some cards offer you higher bonus points for the same amount spent, compared to another card. Sometimes, there are specialised credit cards which give you special benefits when you spend at certain outlets. Evaluate your needs carefully and choose the card which will maximise your benefits.

Customer Service: This is often not considered when a card is chosen. However, transparency of the bank as well as customer service offered are key factors to be looked at. Remember, when you face a problem with your card or lose your card, rewards and benefits don’t matter to you as much as timely and efficient query-solving. Convenience in different payment options of your bills is another factor to be looked at.

Popular Credit Cards in India:

As mentioned earlier, different credit cards are useful to different people. There is no single factor which determines which card is the best. We have analyzed and drawn a comparison of some popular cards, based on two parameters - (a) based on rates and charges and (b) based on benefits offered on the card.

A detailed comparison is available below. If you prefer to download the excel file. For more details, refer to individual banks’ websites. Kindly note that this analysis covers offerings from major banks only & this is not an all-product comprehensive comparison. The analysis is valid on the date being published.

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