Credit cards are one of the most important tools for managing finances. If you are a beginner who has just started earning, you should get your first credit card soon. Credit card is a great tool for managing cash flows, and earning rewards on day-to-day expenses. Before I recommend some cards for you as a beginner, here is a list of certain items that you must remember when you use your credit cards:
- Do not consider credit cards as free money. Use it to spend on your day-to-day expenses. It should not be considered as a tool to splurge.
- Always pay your credit card bill in full and before the due date.
- Always check your credit card statements to review and see if there are any errors or fraudulent transactions.
- Never borrow on credit cards. This is the most expensive form of borrowing. The interest rate is as high as 42% per annum.
- Use it as a tool to build a credit history and generate rewards on your expenses.
- Use credit cards to consolidate the bank statement.
Now that we have understood the key items to remember when using a credit card, let us understand the features of a few cards that could be good for you as a beginner user. These cards are going to be a stepping stone for moving to better and higher rewarding cards in the future as you continue to build your credit history and increase your income.
ICICI Amazon Pay Credit Card
A great co-branded card between ICICI and Amazon which is free for lifetime. The card gives you 5% unlimited cash-back as an Amazon prime member for all spends on amazon. You get 3% back if you are not a prime member. This cashback is credited in your amazon pay wallet. You also get 2% back for all spends on amazon pay for things like utilities and insurance. The entire cashback that gets credited to your wallet can be used for spends through the amazon pay wallet. Unfortunately, there is no lounge access on this card.
SBI Cashback Card
A card that is better than the ICICI Amazon Pay card but comes with a joining fee of ₹999 plus GST. The renewal fee remains same but gets waived off on spending ₹2 lakhs in a year. The premise of this card is very simple. It will give you 5% flat cashback for all online spends. There is a ceiling of ₹5,000 cash back per statement cycle. Beyond spends of ₹1 lakhs per statement cycle, the cashback is reduced to 1%.
Cashback is available on all online spends like Amazon, Big Basket, Flipkart, Myntra, Ola, Swiggy, Rapido, Uber and many others like this. This card does not give any lounge access as well. The cashback is credited to your statement which can be adjusted against your future expenses. This card does not give any rewards on spends like fuel, utility, insurance, rental payments.
IndusInd Tiger Credit Card
This is a co-branded card between IndusInd Bank and Tiger Fintech which is lifetime free. It’s a fantastic card because it gives you 2 domestic lounge accesses per quarter, and 2 international lounge access per year as well. Not only this, but it’s also a good card for foreign spends because the forex markup fee is only at 1.5% plus GST.
You also get a complimentary movie ticket up to ₹500 on bookmyshow every 6 months. You get way too many things for a free credit card. The rewards on the card can be transferred to Air Vistara and Intermiles in the ratio of 1:1.2. This card does not give any rewards on spends like fuel, utility, insurance, rental payments.
American Express Membership Rewards Card
This card comes at a first year fee of ₹1,000 and renewal fee of ₹3,500. The renewal fee is lower at 1,500 per year when you apply the card through a referral. Renewal fee is waived off entirely if you spend ₹1.5 lakhs in a year and 50% waiver if you spend ₹90,000. The card will give you 1 reward point for every 50 rupees spent. There is no reward accrual on fuel, insurance, utilities, tax and EMI conversions.
You are eligible for milestone bonus on this card as follows –
- On doing 4 transactions of at least 1,500 rupees in a calendar month, you will get 1,000 bonus points.
- On spending a cumulative sum of ₹20,000 in a calendar month, you will get another 1,000 points.
Nishant Batra, Co-founder of Holistic Prime Wealth Private Limited
