You need to understand math to benefit from it

If used with caution, a credit card can be a great asset as it can save you money, earn reward points on your spending, and facilitate hassle-free transactions across online and offline platforms.

Previously, banks issued credit card to a very small number due to the credit risks associated with these instruments. But now a huge number of people are using credit cards. Credit cards allow users to buy now and pay later. It thus helps in a financial crisis. Moreover, the cards also come with various unique offers and rewards programs. But the question arises: are you using your card in a way that improves your credit?

As mentioned above, credit cards are rewarding, but the condition is that you use them wisely. Let us understand some critical points to help you use your card smartly.

Look for a high credit limit

There are so many factors that determine how much credit limit you will get when you apply for a credit card. The credit limit provided by banks for each individual is different. Sometimes, after reviewing your profile and repayment capacity, credit card issuing banks ask you for a credit limit. When prompted, you should search for the highest available credit limit. It allows you a higher limit on credit transactions and a high credit limit also improves your credit score.

Pay your credit card bills on time

Banks charge a very high interest rate on outstanding credit card balances. So, if you don’t clear your credit card dues on time, you’ll end up paying hefty penalties and interest charges. Additionally, failure to pay your bills also affects your credit score and therefore your future eligibility for a loan. To avoid paying additional interest and maintain your credit score, commit to paying your bills on time.

Don’t settle for the minimum payment

Sometimes we make a partial or minimum payment on our credit card transactions and decide to pay the full amount on the next billing cycle. It doesn’t help because we end up paying interest on the full amount, as we also become obligated to pay interest on all future transactions from day one until the previous bill is paid in full. It is often mistakenly believed that it is sufficient to make the minimum payment on your card contributions. To avoid penalties and interest, you must pay your bill on time. But to avoid high interest rates, you must also pay the bill in full.

Avoid using your card at ATMs

Credit cards also allow you to withdraw money from ATMs, but you should avoid using this possibility as much as possible. When you withdraw money from an ATM from a credit card account, you are charged upfront transaction fees and interest, the rates of which can be as high as 36%.

Secure your credit card details

These days, scammers keep finding new ways to defraud credit card users. You have to educate yourself and be aware of new threats. As a basic measure, always keep security details such as security PIN, CVV number, OTP and expiration date private and secure. When you hand over your card, always know where it is.

Beware of membership and renewal fees

Every time you apply for a new credit card, you need to know all of its details, from usage and payment rules to membership and renewal fees. When looking for a card, pay attention to the fee structure. The charges must be reasonable and must be offset by the benefits of the card. Additionally, many cards allow a fee waiver if you spend a certain amount per year. Look for this inversion benefit to save on annual fees.

Read the credit card bill carefully

In addition to paying your credit card bill on time, carefully review the itemized bill. Understand what charges are on your bill before you pay your dues.

Get a loan if needed

Credit cards also allow unsecured personal loans based on your credit history. But credit card loans are always more expensive than other loans, including personal loans. But still, if you need financial assistance, you can use your credit card to avail a loan without any paperwork or bank branch visit.

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