How to Choose Right Credit Cards?

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The primary reason for using a credit card is to get value back on your spending. With the right credit card strategy, you can earn anywhere from 10–70% value back on your spends, and if you’re lucky, sometimes even more.

That said, building the right credit card strategy is subjective and depends entirely on your spending patterns. There is no single credit card that can deliver the maximum possible rewards for everyone. You need to understand where you spend the most and optimise your card selection accordingly.

This article will walk you through a practical approach to selecting the right credit cards based on your needs and spending habits.

Understanding the Different Types of Credit Cards

Credit cards can be broadly classified into four types. Based on rewards, there are two categories: Cashback Credit Cards and Reward Points Credit Cards. Based on partnerships with the bank, there are two more categories: Core Credit Cards and Co-branded Credit Cards.

1. Cashback Credit Cards

As the name suggests, cashback credit cards offer cashback on your spends. In most cases, the cashback is automatically adjusted against your next month’s statement. A few examples include the SBI Cashback Credit Card, Swiggy HDFC Credit Card, and HSBC Live+ Credit Card, among others.

2. Reward Points Credit Cards

These credit cards reward your spending using different “currencies.” Each bank has its own name for reward points. For example, Axis Bank uses EDGE Rewards / EDGE Miles, while American Express offers Membership Rewards (MR) Points.

In some cases, you can use reward points to settle your credit card statement, but this is something you should generally avoid with these cards. The real value of reward points lies in transferring them to airline or hotel partners and redeeming them for flights and hotel stays.

Since the maximum value of these points lies in transferring them to airline or hotel partners, or by booking flights and hotels through the bank’s portal, most of these cards can also be classified as travel credit cards.

Some examples include the HSBC TravelOne Credit Card, Axis Atlas Credit Card, HDFC Regalia gold and Axis Horizon Credit Card, among others.

3. Co-branded Credit Cards

When a bank launches a credit card in partnership with a company to offer higher rewards for spending within that company’s ecosystem, such cards are known as co-branded credit cards.

Some examples include the HDFC Swiggy Credit Card, HDFC Marriott Bonvoy Credit Card, Scapia Credit Card, HDFC Tata Neu Credit Card, and the IndusInd EazyDiner Credit Card, among others.

4. Core Credit Cards

Core credit cards are cards issued directly by a bank without any partnership with an external brand. These cards offer rewards and benefits that are bank-led and flexible, allowing you to earn cashback or reward points that can be redeemed across multiple categories such as shopping, travel, vouchers, statement credits or or even transferred to partner airlines and hotels.

Some examples include the HDFC Infinia Credit Card, Axis Horizon Credit Card, and the IndusInd Pinnacle World Credit Card, among others.

Understanding Your Spends

There’s a simple rule you should always remember: choose credit cards that suit your lifestyle, not the other way around. First, identify the categories where you spend the most, and then look for credit cards that maximise rewards in those areas.

Make a list of your monthly expenses and categorise them into different spending categories, as shown below:

Category	Expenses	Total Amount Spent	Percentage
Food and grocery orders	1. Swiggy: ₹ 10,000 2. Zomato: ₹ 2,000 3. Big basket: ₹ 5,000	₹ 17,000	11.9%
Dining out	1. Eazydiner: ₹ 2,000 3. Restaurant not listed on EazyDiner: ₹ 5,000	₹ 7,000	4.9%
Online Shopping	1. Amazon: ₹ 5,000 2. Flipkart: ₹ 2,000	₹ 7,000	4.9%
In-store Shopping	1. D-mart: ₹ 5,000 2. Shopping Mall: ₹ 2,000	₹ 7,000	4.9%
Education Fee	1. Kid’s Education Fee: ₹ 10,000 monthly average	₹ 10,000	7%
Utility, Insurance, Rent etc	1. Rent: ₹ 40,000 2. Insurance: ₹ 5,000 3. Utility: ₹ 5,000	₹ 50,000	35%
Travel	1. Flights: ₹ 20,000 2. Hotels: ₹ 20,000	₹ 40,000	28%
Fuel	1. HPCL/ IOCL/ BPCL: ₹ 5,000	₹ 5,000	3.5%

Creating a table like this will help you identify the categories where you spend the most and help you in choosing the right credit cards.

Now, let’s analyse this case. Around 35% of the spending goes towards rent, insurance, and utilities. While these expenses are often excluded from rewards, there are still ways to earn value on them if you plan smartly and use the right payment methods.

In many cases, Amazon Pay balance is accepted for utility and insurance payments. You can buy Amazon Pay vouchers using your preferred credit card and then use that balance to pay these bills, effectively earning rewards where none would normally apply.

For rent payments, platforms like RedGiraffe allow you to pay rent using a credit card by charging a small convenience fee of around 0.46%. If your credit card earns, say, 3% base rewards, even after accounting for the convenience fee, you still come out ahead, effectively earning a net 2.54% value on your rent payments.

But the Question Still Remains: Which Credit Card?

Trust me, you’ll need to stay with me till the end and carefully analyse all your spends to come up with the right strategy.

The second-highest share of spending in this case is travel, accounting for 28%. Believe it or not, this is the category that makes the biggest difference when choosing the right credit cards.

If you enjoy travelling and prefer travelling in comfort or luxury, reward points credit cards are usually the better fit, as they offer higher value through flight and hotel redemptions. On the other hand, if travel isn’t a priority for you or you have little interest in it, you’ll likely be better off with cashback credit cards, which provide straightforward savings on everyday spending.

Next comes groceries, food, and dining out, which together account for around 17% of the total spending. These expenses can usually be optimised based on the platforms you use the most. In such cases, opting for a co-branded credit card tied to those platforms can help you maximise rewards and savings. And same goes for Shopping.

In this case, a travel-focused card like the HSBC TravelOne Credit Card can be complemented with a co-branded card such as the Swiggy HDFC Credit Card, which offers 10% rewards on Swiggy and 5% each on Amazon and Flipkart.

Since fuel spending is relatively low in this case, it can be efficiently managed by purchasing fuel vouchers and paying through them instead of opting for a fuel-focused credit card. However, if fuel spends were significantly higher, getting a co-branded card with your preferred fuel company would have made more sense.

What’s Next?

Now that you understand how to analyse your spends and pick the right credit cards for yourself, the next step is to learn how to save even more on those spends.

For example, buying a BigBasket voucher from Cred using a credit card can immediately save you 4% upfront, as these vouchers are often sold at a discount. Purchasing these vouchers using the SBI Cashback Credit Card can earn you an additional 5% cashback.

You can further optimise this by loading the BigBasket vouchers into your BigBasket wallet and paying through the same wallet via the Tata Neu app, which can fetch you another 5% value back.

In total, this strategy gives you a 14% effective discount on your regular BigBasket purchases, compared to just 5% cashback if you had used the same SBI Cashback Credit Card directly on the BigBasket app.

I know this may sound confusing, but remember, nothing is truly free. Extracting that extra 10% of value does require some effort. It might feel overwhelming at first, and you may not immediately know what to do or where to start, but that’s exactly why we’re here.

Keep coming back to learn more and make the most out of your money. And if you ever need help, feel free to reach out to us through the contact form.

Banks are not offering me the card that gives the highest rewards for my spending, what should I do?

Often, the highest reward rates are offered on super-premium credit cards, and banks usually have strict eligibility criteria for these cards. For example, HSBC Premier Credit Card can fetch you up to 72% value back on hotel bookings made through its rewards portal. However, qualifying for HSBC Premier typically requires a net monthly salary credit of ₹3 lakh into an HSBC salary account.
If you meet this eligibility and the card aligns with your lifestyle and spending patterns, it absolutely makes sense to get it.
But if you don’t qualify, you shouldn’t worry. You can always opt for the next best alternative. In this case, the HSBC TravelOne Credit Card has much lower eligibility requirements and can still offer up to 48% value back on hotel bookings, making it a strong option for most users.

Do I need a stack of cards in my portfolio for a perfect strategy?

It’s more about optimisation than chasing perfection. You don’t want collecting credit cards to become your sole hobby. Instead, find a set of credit cards that cover the majority of your spending and focus on living your life while using those cards smartly. Remember, a credit card is just a tool, meant to be used to improve your life, not complicate it.

Isn’t it nitpicking over a small amount of money?

It might seem like nitpicking at first, but it really isn’t. Small percentages add up quickly when applied to everyday spending over an entire year. What looks like a few hundred rupees per transaction can easily turn into tens of thousands in savings annually.
That said, it’s not about obsessing over every rupee. The idea is to set up a simple, optimised system that works in the background while you live your life. Once your strategy is in place, the extra value comes with very little ongoing effort.
Think of it as smart optimisation, not penny-pinching.