The Best Credit Card
There is a misconception that the best credit card is the one which has the highest credit limit.
Credit card X has 25,000 rupees as the credit limit
Credit card Y has 2,00,000 rupees [2 lakh] as the credit limit.
Just because credit card Y has higher credit limit than credit card X, credit card Y is the better credit card. It’s not true at all.
Below are some parameters which can help you to decide whether a particular credit card is the best credit card or not:
Credit period is something which one can use the card for maximum number of days. It varies from card to card. Most of cards support maximum credit period of 30 days to 60 days. Higher the number of credit days, the better.
If you are not sure about what a credit period is, please read: understanding credit card billing cycle
How many reward points will be given on each rupee you spent using the credit card.
Credit card X gives 10 reward points for your spending of worth 1500 rupees.
Each reward point is equals to: 1500 / 10 = 150 rupees.
Means, you will earn 1 reward point for each 150 rupees you spend.
Credit card Y may give 20 reward points for your spending of worth 15,00 rupees.
Each reward point is equals to: 1500 / 20 = 75 rupees.
Means, you will earn 1 reward point for each 75 rupees you spend.
Since credit card Y is giving 1 reward point for each 75 rupees, and credit X requires 150 rupees to give 1 reward point, credit card Y is better.
The lesser number of rupees to be spent for each reward point, the better.
This is one of the most important points to decide whether a credit card is the best credit card or not. Each bank will provide the reward points catalog for items on their bank’s website. You have to browse through all the items and the respective required reward points.
Bank X may offer 500 rupee gift voucher for 1000 reward points, and Bank Y may offer 500 rupees gift voucher for just 500 reward points.
On an average, bank X is charging 2 reward points for each rupee and bank Y is charging just 1 reward point for each rupee. Since bank Y is giving better deal, bank Y’s credit card is better.
Each bank offers different kinds of details.
5% cash back offer
Buy 1 movie ticket and get 1 movie ticket for free, etc…
Each bank has its own set of offers. Though it’s very difficult to gauge this option, there is nothing wrong in exploring.