“Credit cards” - the first thing that might come to your mind upon hearing this term is to receive exciting reward points and save big on your monthly groceries! And who knows, you might also be eligible to travel to your dream holiday destination for (almost) free! It’s mind-blowing, right?

Credit cards can be a boon if used correctly, but they can also break your bank if you choose the wrong one! The credit card market has expanded tremendously in the past few years, offering new options to both new and old customers.

However, with more options being introduced, higher amounts of confusion are created among users, especially those planning to apply for a new one. It can be difficult to choose the best one, especially when there are so many attractive options around.

So, to make the selection process easier for you, here are some tips and factors to consider while picking the best credit card.

1. Go for a Good Rewards Structure
The most essential feature of any credit card is the bonus card offers you will get. The ideal deal would be to earn more than 1% on your purchases. You would want to earn bonus rewards in the product categories you purchase the most from.

For example, if you do a lot of grocery shopping or love to spend money on different cuisines, then you must look for a credit card that provides bonus points in those categories. Also, even if you don’t have any particular purchasing or spending category, your card company must still offer a flat-rate that you can earn for almost any purchase made.

2. Learn About the Annual Fee
Let’s face it, some of the best credit card companies would charge you some annual fee as per the terms and policies you agreed upon. However, you must not reconsider applying for a credit card because of this. Trust me; these annual charges will be worth it considering the benefits you would get in return, especially if you maximize the rewards structure.

Nevertheless, you must consider this factor before applying for any card. If you think that you won’t benefit in the long run or are not getting enough value, you might look for other options.

3. Check Your Credit Score and Credit Report
Always work on improving your credit score as much as possible. Most of the banks and non-banking financial institutions would prefer a CIBIL score of 750 and higher. If you have a credit score lower than that threshold, you won’t get approvals for a credit card.

Additionally, you must also have a good credit report, which is prepared based on your past purchase and payment histories. The chances of improving your credit score and credit report increase if you pay off your bills, debts, or EMIs on time.

However, the good news for some applicants having a score less than 750 is that they can get a delayed approval or have a card limit lower than the higher-tier and premium ones. Also, having a good credit score simply increases your chances of getting approvals. It is not the only factor to get approved as there are other requirements and criteria as well.

Below is a list of the credit score ranges according to FICO:

● 300-579: Very Poor
● 580-669: Fair
● 670-739: Good
● 740-799: Very Good
● 800-850: Excellent

4. Determine the Card Type You Need
Not all credit card types would suit your unique buying needs. Before applying, learn about the following three main credit card types:

a) Rewards: This card can allow you to offset your purchase expenses or pay your upcoming travel bills by redeeming miles or points. The Rewards card will be extremely beneficial if you have a good credit score and have no debts left on your shoulders.

b) 0% APR: A 0% APR credit card can be an excellent tool if you wish to get out of a debt or meet the costs of new purchases. Besides, this card type offers benefits like balance transfers and/or no-interest on purchases.

c) Building Credit: This card is ideal for those who don’t have much credit history and have a fair or average credit score, such as 669 or lower. Hence, this is suitable for people with bad credit or credit card newbies.

However, having a good CIBIL score would unlock the best interests rates for you, along with other perks like mortgage and loan approvals.

Apart from the above three major types, there are other kinds of credit cards as well, designed to suit the specific needs of various users. These include -

● Balance Transfer Credit Cards
● Student Credit Cards
● Standard "Plain-Vanilla" Credit Cards
● Charge Cards
● Prepaid Cards
● Subprime Credit Cards
● Business Credit Cards
● Limited Purpose Cards

Do your own homework and research as it simplifies the selection process, especially when you have so many options and card types.

5. What are the Additional Benefits?
Most of the credit cards offer additional benefits apart from their rewards structure. Moreover, some high-tier cards even provide annual credits or lounge access, while some others may give you additional perks by partnering with various brands. Yet some others might enable you to make bookings at your favorite hotel or airline brands, allowing you to achieve elite status.

6. Check the Sign-Up Bonus
Some credit card companies provide a sign-up bonus after the applicant meets certain eligibility criteria, mostly spending requirements. For example, you might be asked to complete specific spending criteria within a span of the first 3-6 months of using your new card.

However, you must not base your credit card selection decisions entirely on how much sign-up bonus you might get with a particular company. There are other factors to consider that might outweigh this offer.

Final Words
To conclude, always check out the terms and conditions associated with each credit card company, and make sure that you are making the best choice for yourself. Weigh out the things that are most important to you, and apply for your credit card accordingly.

Although some cards might offer tonnes of offers and benefits, these won’t be of any use to you if you have different likes or interests.