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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, of course, choose to go with
whatever comes your way, or whatever your friend recommends, but if you
at least 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 at least 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 doesn't 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 traveler. 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) haven't exceeded your credit limit). Avoid banks
that makes you liable for card misuse for a single minute after
reporting it. |
