Thinking of a new credit card for festive sales? What to check first

During the festive season, shoppers get a range of discounts on both online and offline purchases. Credit cards bring additional discounts on smartphones, laptops, electronic goods, clothes and travel bookings. This leads many customers to consider getting a new card. But a card should not be taken only for a sale. It is also worth checking how much it will be used through the year.

According to Aditya Gupta, founder and chief executive officer of Novio, the festive sale can become an excuse to take a credit card. But while choosing a card, it is essential to keep long-term benefits and one's own financial capacity in mind.

When applying for a regular credit card, income, employment, credit score and credit history may be examined. First-time credit card applicants and those with a low credit score may therefore face difficulty. In such cases, a credit card backed by a fixed deposit (FD) can be considered. The credit limit on this card is set on the basis of the amount deposited.

For example, if the limit is up to 90 per cent of the FD, a deposit of Rs 10,000 could fetch a limit of Rs 9,000. The actual limit depends on the terms of the card. For some cards, the application and video KYC can be completed in 5 to 10 minutes, while approval can generally take 24 to 48 hours. This period can also vary with the card issuer.

Another point to keep in mind is that applying for several cards in a short time can affect the credit profile. Compare different cards and pick the one that suits your needs. Paying bills on time, avoiding unnecessary debt and using the available credit limit sensibly are just as important.

While choosing a card, do not look only at the festive discounts. Check the reward points earned through the year, savings on purchases, and benefits on travel, entertainment and grocery services. Also find out about the annual fee, interest rate and other terms.

On the whole, a card that serves you over a long period and that you can manage within your financial means matters more than a few days of savings during a sale.