Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
  • Questions to ask while choosing a Credit Card

    Credit cards are one of the most sought after and versatile financial products being used in the world today. These cards have completely changed the way individuals spend their money. Online transactions are now the norm with most individuals opting for it due to the comfort and ease of doing so. Also credit cards come with a number of offers and benefits. Credit cards work on the principle of providing money on a credit that individuals will have to pay back each month. The lure of added money is always thrilling, however every good thing in excess is harmful. It is very easy to succumb to this temptation and spend more money than one should, thus falling into a credit card debt trap which is very difficult to get out of. Although credit cards have a number of advantages, individuals should always use the same very judiciously. In case someone decides to procure a card, he/she must research properly and find out the right type of credit card for himself/herself. For example, if a credit card comes with no joining fee but provides a lot of fuel exemptions and the customer is not a rider/driver, there would be no point of procuring the credit card just for the purpose of not having to pay the joining fee.

    Credit Card Questions
    Credit Card Questions

    Questions to the Issuer before Processing the Credit Card Application

    Given below are some of the questions that individuals must answer prior to availing a credit card. If individuals can answer these questions satisfactorily then they can go ahead to procure the credit card of their choice.

    Why is the Individual Applying for the Credit Card

    This is basically to assess the ‘need’ of the customer rather than a ‘want’. Is the credit card going to be beneficial for him/her? Will it help to increase the credit score of the potential cardholder? Does the card come with low fee and a reduced rate of interest? Will the benefits and privileges offered by the card suit the individual’s lifestyle and spend habits? If the answer to all these questions is a ‘yes’, then the customer should go ahead and get the card. But if the card is to be procured on a whim or just because it comes with a lot of freebies, then the reasons are not relevant enough.

    How is this Card in Comparison to other Choices

    It is important to look around and research different card options before settling on one card. Comparing the pros and cons of each card is essential. Certain credit cards may have offers that are tempting such as low rate of interest and no joining fee, but if individuals do not use them judiciously, there is no point. Certain cards may have benefits that is not suitable to the lifestyle of the potential cardholder although the card may be highly rates, which means that the card will not be good for the individual. Also, customers should go for cards that have the least amount of negative feedback or complaints against it.

    What is the Credit Line and Rate that can be procured

    Certain credit cards will provide a range of rates but the window is quite wide. Certain other cards provide a specific rate. Customers should ask for this information prior to settling on one card and push for the range that they would want.

    Can Rewards be Reduced or Revoked

    This is required if individuals are procuring cards solely for the purpose of the rewards being offered. Certain issuers will evoke the rewards in case payment for credit card bill has been delayed. There are also certain instances wherein rewards may be revoked. Hence, if individuals are procuring credit cards solely for the purpose of the rewards being offered, then they must find out all information regarding rewards and when they can be revoked or reduced.

    Can anything that the Customer Charges be used against him/her

    Certain credit card providers use the purchase records of individuals to decide their creditworthiness. For example, if an individual uses his/her credit card to pay for counselling sessions or purchase goods from a market in a disreputable part of town or so on, it could result in their credit limit getting reduced. Some cardholders may see this as an invasion of privacy In such cases, it is always better to ask the provider about all these details before purchasing the credit card. Customer should ask the provider if his/her transaction will be used to rate his/her credit risk.

    What is the Grace Period before which Interest is applied

    The grace period for every credit card varies based on the type of credit card and the company. Although there is a standard credit card grace period, it may differ. Certain issuers impose a heavy rate of interest if the bill is not paid within the due date.

    How is the Individual Protected against Credit Card Fraud

    A lot of regulations limit liability for unauthorised credit card transactions. A number of issuers cap losses at nil unless certain rules are followed. Hence, individuals must find out how the card issuer would handle charges that were not made by the credit cardholder. Does the issuer track charges or block the card if charges that are out-of-the-ordinary are noticed? This feature, if available is great. Customers must also enquire if there are other security measures in place to protect their credit card against fraud.

    How will the Customer be treated in case they Fall Behind on Payments

    Although it may not seem productive, a customer must ask his/her credit card provider how he/she will be treated if the customer runs into financial troubles. Will the individual be hit with a penalty rate or late fee? Will the customer lose any benefits?

    Credit cards will have all their terms and conditions listed on the website of the credit card provider. This must be studied carefully.

    Certain providers have programs that reduce interest rate temporarily for individuals who are experiencing financial troubles whereas others don’t. Hence, prior to procuring a credit card, these conditions should be studied.


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