With India’s credit landscape evolving continuously, customers now have a multitude of credit options to choose from. So, how does one go about choosing a credit product that is right for them?
We live in a time when access to finance has never been easier. But, a major driver of that convenience is credit. Today, credit products like credit cards and loans are accessed by a majority of the population and are vital in helping them manage their expenses and purchases. With India’s credit landscape evolving continuously, customers now have a multitude of credit options to choose from. So, how does one go about choosing a credit product that is right for them?
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The credit options available today are meant to cater to a variety of needs – buying a gadget, funding a vacation, handling emergency medical expenses, and more. Begin by assessing your financial status – income, expenses, and current debt – to find out the additional credit you can avail and subsequently, the credit options you are eligible for. By borrowing within your means, you can avoid the pitfalls of unmanageable debt.
Choosing the right credit card
Credit cards are among the most popular forms of credit available today. If used wisely and responsibly, they can be beneficial. Credit cards essentially provide a revolving line of credit, allowing you to make purchases up to a specified limit. Reward points and loyalty programs are one of the perks that credit cards offer which can help you save on purchases. Additionally, the no-interest period applicable on timely repayments further adds to the flexibility that a credit card offers.
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Choosing a credit card that aligns with your spending habits is crucial. Most credit cards offer cashback and discounts on a variety of spends such as groceries, dining, entertainment, travel, etc. There are also cards that are specially designed to cater to a specific expense category. For instance, if you are a frequent traveller, credit cards that offer air miles or discounts on hotel bookings can help you save on travel-related expenses. Regardless of the card you choose, always read its terms and conditions carefully, especially the fine print related to interest rates, annual fees, and penalties.
The process of choosing a credit card has been greatly simplified by online comparison tools that filter credit cards based on requirement and eligibility. While credit cards may be more suited for short-term needs, loans, with their structured repayment process, may be ideal for fulfilling long-term goals such as buying a house, or retirement planning.
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Tips for choosing a credit card
Do your research: Once you have short-listed a card, be sure to read its terms and conditions carefully, including details such as the annual fee, interest rate, and late payment charges.
Start with a low-limit card: If you are new to credit cards, choose a card with a low credit limit. Not only will this allow you to spend within your means, but also help you build your credit history.
Pay your bills on time: This is one of the most effective ways of building a credit history. Moreover, considering that most credit card issuers charge a hefty late payment fees, timely bill payments can save you money you’d otherwise have to pay as late payment penalty.
Use credit responsibly: One of the cardinal rules of using credit is to keep your usage within your means. Use your credit card for purchases hat you can pay off in full each month. Avoid carrying over an outstanding balance on your credit card for it can potentially snowball into a bigger debt.
With the various benefits they offer, credit cards are certainly a useful payment tool that is also convenient. To derive the maximum benefit, use it prudently by spending within your means and paying your bills on time.
