There is no one “best” rewards credit card as such. You might want to be rewarded with free shopping vouchers at your favourite store, your friend might prefer a card that offers airline miles for cheap or free tickets, your colleague might choose movie and entertainment perks for those weekend evenings. Each card offers particular benefits in travel or entertainment or lifestyle, shopping and it depends on what rewards you think are the most rewarding for you!
It could get a little confusing to choose the best rewards program since there are so many offers on the market today. The best rewards credit card would depend on various factors, such as your income, your requirements, your spending habits and so on. Here are some practical tips on how to go about choosing a rewards card.
Things to keep in mind when choosing a rewards card
While choosing the best rewards credit card, consider the following points before making your choice:
• Your net income: Credit cards have income eligibility criteria since they can be a pretty significant monthly expense. There are various cards available to individuals under different income brackets. It’s absolutely vital to consider your monthly net income and then decide whether you can really afford the credit card you have in mind. A credit card could considerably increase your monthly expenses and might possibly put you in debt.
• Your spending pattern: You need to carefully examine your spending habits and then decide what you would like to use your credit card for. If you are an online shopaholic, go for a credit card which offers the best rewards for online shopping like the HDFC Snapdeal Credit Card. This card enables you to earn 3X more Reward points for spending online at the Snapdeal website.
Similarly, if you spend heavily on movies, then it would be a good idea to get a credit card which offers accelerated reward points on entertainment spends. Determine what you spend on and how you would like to be rewarded when making your choice.
• Fees and other charges: Be aware of the fees and charges involved before applying for a rewards credit card. Thoroughly research the annual fee, joining fee, renewal fee and other associated charges. Don’t get carried away by attractive rewards offers, as the fees might outweigh the benefits.
• Interest Rate: A vital factor. Don’t be fooled by attractive offers that could mask a high interest rate. Here too, the amount you pay in interest will negate any rewards you get on your spending. Consider applying for a card with a lower interest rate, even if it gives lower reward points, as compared to a credit card that offers great reward points but a higher interest rate. Also, credit card issuers could have promotional offers like 0% interest. Generally, the promotional period spans a couple of months and you will most probably find yourself paying a steep interest rate thereafter. Be careful to avoid the debt trap.
To put it in a nutshell, the best rewards credit card is one that offers good benefits in terms of reward points and loyalty program but which also offers a low interest rate. Accumulating rewards points feels great—until the time it is wiped off if you’re paying fees that outweigh the benefits. So, do your research diligently even if it feels tiresome—it will pay off in the long run.
Alternatively, if you think you need help with your credit card application and advice on eligibility, CreditMantri can guide you through the entire process and match you with the credit card that suits you needs the best.