How to compare credit cards before I apply for one?

In close to two decades, India has seen a rise in credit card penetration. Where in the 1990s most purchases were made using cash, the trend today is to whip out plastic money to carry out most transactions, from eating out to shopping to fueling up your car. This could be the indication of a bigger shift – of moving from cash to a cashless economy. It is even more imperative then, that when you choose to make your credit card application, you should shop around and compare the options available in the market before finally signing up for one.


Here’s what all you need to look at when comparing offers:

Check for the lowest rates – Most cards tend to offer introductory interest rates that are significantly lower for up to a year, as compared to what you would need to pay otherwise. While that does work in your favour, look for cards that offer the lowest rate even after the initial period expires.

Fees and charges – Don’t necessarily shy away from annual fees. It is likely that a card that charges you an annual fee has better rewards and other benefits to offer in comparison to a card that is free for life. Of course, this isn’t always the case, so make sure you read the fine print carefully before you agree to the terms and conditions.

In addition, the card issuer will also levy charges for example in case of a late payment. These charges when added up with the applicable taxes can be quite steep, so keep an eye out for these as well.

Rewards and benefits – There are several cards out there in tie-ups with companies that offer you benefits extending from free air miles (that can be redeemed towards purchase of air tickets on travel) to offers on using your card at fuel stations to free movie ticket vouchers. Others also offer attractive cash back options that are valid on certain spends or fuel surcharge.

When you’re considering applying for a card, give a thought to what your everyday spends are – and opt for a card that will help your maximise usage in that area. For example, if you regularly make grocery purchases on your card, select a card that gives you more benefits (say additional reward points or cash back) at such stores.

Avoid cards that are attractive in terms of the benefits they offer frequent flyers, if you do not travel much and are unlikely to utilise these facilities – it would nullify the benefits in such a case.

Credit limit – In an ideal scenario, your credit limit needs to be neither too high nor too low. In the case of the latter, you may not have enough purchasing power to make the purchases you had in mind, which then defeats the purpose of having a card in the first place. If the former, you may be tempted to spend beyond your means – and while rolling over debt works brilliantly for the card issuer, you risk falling into a debt trap that will only continue to spiral downwards.

When you’re comparing cards, not only do you want to keep the above pointers in mind, but you also need to consider where and how you will go about this exercise. There are several sites online that allow you to compare various cards, and these can indeed be extremely helpful in making your decision before you apply. However, do check two or three sites before you narrow down your choices, as sites tend to promote cards that advertise with them. To get a wider and unbiased view, compare across sites as well.

Lastly, remember that in order to get any credit – be it a loan or credit card application approved – you need to be in good credit health. It is a prudent move to check your credit report and credit score prior to applying for a card. This gives you enough time, if the score is low, to work towards rectifying the same before applying, and thereby increasing your chances of credit card approval.

Lenders can do a cibil score check after you submit your application so consider availing the services of a credit health management company to improve your cibil score over a period of time.