How to Choose a Credit Card

Do that sum before you read a single benefits list. It disqualifies most cards in about ten seconds, and it is the calculation no advertisement shows you.

How much do you have to spend to justify the annual fee?

Below are the break-even figures for cards we hold verified fee and reward data on. Fees are shown with 18% GST added. Break-even is our own arithmetic from those two numbers.

Fee and reward data from issuer rate cards, as of 15 August 2026. Break-even is fee including GST divided by the effective reward rate.

Why is break-even not the same as the fee waiver threshold?

They answer different questions. Break-even is where rewards cancel the fee. The waiver threshold is where the bank stops charging the fee at all.

The waiver is almost always the higher number. On the SBI Cashback card you break even near ₹28,000 of spend, but the fee only disappears at ₹2,00,000.

So there is a wide middle band where you are paying the fee and still ahead. That is fine. What is not fine is spending more than you would have, just to reach a waiver.

What does the advertised reward rate leave out?

Exclusions. Most Indian cards pay little or nothing on rent, fuel, wallet loads, insurance premiums, government payments and education fees. For many households that is a large share of card spend.

Then come the caps. A card advertising 5% online cashback may cap it per statement cycle. Past the cap you are earning the base rate, which is often 1%.

Finally, redemption. Points are only worth what you can convert them into. Check the conversion rate before you value them, and run it through our reward value calculator.

Cashback or reward points — which should you pick?

Cashback, for most people. It needs no decision, no portal and no expiry date. It lands on the statement and reduces what you owe.

Points beat cashback only if you will actually redeem them well, usually against travel. That takes attention and planning. If you have not redeemed a point in two years, you are not a points person.

Our list of cashback credit cards covers the shortlist. If this is your first card, start with first credit cards instead.

When is a premium card the wrong choice?

Whenever the benefit is something you could simply buy. Lounge access is the clearest case. If you fly twice a year, a paid lounge visit costs far less than a ₹14,750 annual fee.

The other trap is revolving. Card interest is charged monthly and compounds fast. If you carry a balance even occasionally, the interest wipes out every reward on this page. Check the arithmetic with our credit card interest calculator.

And keep an eye on the credit record. Applications, utilisation and payment history all move your score. See what affects a credit score.

Common questions

How many credit cards should I have?

Enough to cover your two biggest spend categories, which is usually one or two. Every extra card adds a due date to miss and a fee to track. More cards do raise your total limit, which can lower your utilisation ratio, but that is a weak benefit against the risk of a missed payment.

Is a lifetime free credit card worth it?

Often, yes. With no fee, every rupee of reward is profit and break-even is zero. The trade-off is a thinner benefit set and usually no lounge access. For anyone spending under roughly ₹25,000 a month, a lifetime free card is normally the correct answer.

Does applying for a credit card lower my credit score?

Each application creates a hard enquiry on your bureau file, and several in a short period look like distress borrowing. Space applications out. Check your eligibility on the issuer’s own site first, since a soft check does not leave the same mark.

What is an effective reward rate?

It is the value you get back as a percentage of what you spend, after conversion. A card giving 4 points per ₹150 with each point worth ₹1 pays about 2.7%. Always convert points to rupees before comparing cards, because point values differ widely between issuers.

Should I close a credit card I no longer use?

Not if it is free to hold. An old card lengthens your credit history and adds to your total limit, both of which help your score. Close it if it charges a fee you are not earning back, and get the closure confirmed in writing.