Cardnomics is written by credit card industry professionals which helps you to take more informed view about credit cards
It‘s been a busy week at Wizi HQ, we‘ve been preparing ourselves to launch seamless digital buying for credit cards with one of the largest banks in the country.
One of things I‘ve been constantly asked and often one of the most searched terms on credit cards on the internet is, “What is the best credit card?” - of course it comes with certain context as well. It would go something like this...
What‘s the best card for students?
What‘s the best card without income proof?
What‘s the best card for travel?
It is also one of the best ways bloggers get your attention using various content formats like polls, videos, reviews.
But the larger question is, “Is there a best in objective terms”?
I will use the term card issuers instead of banks - because there are card brands that are not banks themselves (Example: Slice card, Unicard, Bajaj etc.)
Before coming to that - let‘s see how card issuers create credit cards at a very high level.
How are credit card products created?
**User profile & Spend Profile**
Card issuers create cards with a “user in mind“ - it could be someone from their existing customer base or someone who they want as a customer.
Credit card head of bank 1: I have lot of business owners as bank customers. Can I create/grow the relationship with them by offering a credit card that suits them?
Credit card head of women-led NBFC: I have lot of women loan account holders. Can I create a credit card that will help them spend better?
So, after deciding on who the card is meant for - a spend profile is arrived, it might look like the following.
Here‘s where card issuers decide which type of transactions to promote using reward points.
Then, the core card benefits are created after understanding the user profile.
Example 1: A Chartered Account targeted card will have professional indemnity insurance whereas normal cards don‘t.
Example 2: A revolver-centric card focuses on EMI conversion, Pay-in-3 installments more than other benefits.
Example 3: A student-centric card may focus more on online shopping than say utility bills.
Example 4: A new card issuer who does not have a significant customer base might offer very low finance charges to attract users.
Rewards are constructed to drive these spends - now the points system is a function of competition and how much money the card issuer wants to spend.
If the competition is a strong player and offering 1% cashback for the same user, then most likely the issuer will also provide 1% for a certain type of spend.
Charges also follow a similar logic:
- Cost of benefits.
- Premiumness of the card.
- Cost to acquire the customer.
So, Having understood the aerial view of how issuers create credit cards, let’s get back to the main point - Is there a best card?
There are 300+ credit cards in the market, is there a best credit card?
Comparing different credit cards is like comparing apples and oranges.
Creating a universal best card list doesn‘t help anyone.
Every credit card is built with a certain purpose for the user, so it purely boils down to - Does the card fit the user's needs?
Credit cards are becoming more and more focused - Zomato cards, Gaming cards, international student Credit cards like Zolve, etc. So, it is more important to ask “"What is my need and who is offering the right card that suits me?"
You may want a credit card, does the credit card issuer want you? Are you eligible in the first place?
Final word, how to think about “choosing” credit cards?
One of things that we‘ve seen people repeatedly asking is “Is this card free for life?” - my view that‘s probably the 3rd or the 4th question you should ask.
One of the harsh truths is that - the issuer chooses you, so if you are eligible - then should you take it?
I’ve created a thinking framework for - How to choose a credit card I'm eligible for?
I will write a separate post on how you can still get a credit card even if you don’t meet some eligibility requirements.
If you think, there are better ways to going about this process, do message us.