1. Assess Your Spending Habits and Financial Profile
- High Spender: If you spend a lot, look for cards that reward you for reaching milestones. For example, the Kotak811 Credit Card offers 4 free PVR tickets or ₹750 cashback if you spend over ₹75,000 annually.
- Good Credit History: With a high CIBIL score and stable income, you can qualify for cards with surcharge waivers, bonuses, maximum reward points, and more.
- Low Credit Score: If you have a low CIBIL score or little credit history, consider a credit card on a fixed deposit, where the FD acts as collateral. The credit limit can be up to 90% of the FD amount.
2. Understand Why You Need a Credit Card
- Building Credit: A card with zero annual fees can be helpful if you’re starting to build credit.
- Improving Credit Score: For a low credit score, use a credit card against an FD to improve it.
- Frequent Traveler: Choose a card with rewards on travel, airlines, and hotels.
3. Compare Interest Rates
- Full Payment Monthly: If you can pay your bill in full each month, you may afford a card with a high APR.
- Uncertain Payment: Consider a card with a low APR if you’re unsure.
- Large Purchases: For big purchases with repayment over time, go for a card with a 0% introductory APR.
4. Compare All Fees and Penalties
- Useful Rewards: A card offering fuel waivers, cashback, and redeemable rewards may justify higher fees if they are useful.
- Other Fees: Check charges on foreign transactions, cash advances, balance transfers, and late payments. Avoid unnecessary fees based on your usage.
- Minimum Payment: Typically 5%-10% of the outstanding balance. Aim for full payments to avoid interest charges.
5. Check Rewards and Additional Benefits
- Shopping and Travel: Look for rewards on shopping, flights, movie tickets, and fuel waivers.
- Extra Benefits: Explore any additional perks. If a card offers features you need along with extras, apply right away.