Though credit cards are rewarding, you can get the maximum out of
your card only if you use it smartly. Do you know how to use your card
smartly? Here are 10 ways which would tell you how:
Ask for high credit limit
The allowed credit limit for each individual is
different. If you are opting for a new credit card, ask for the highest
available credit limit. Besides allowing you a higher limit on credit
transactions, a high credit limit also improves your credit score. This
is since low use on a high spending limit implies a lack of
credit-hungriness on your part, which contributes usefully to your
credit history.
Take time to understand rewards
Credit
cards give you reward points for specific kinds of spending. Some
high-end cards also come with guaranteed gift vouchers and benefits,
such as free access to airport lounges. Some gifts may also be provided
as joining benefits, others as periodic benefits. Additionally, your
accumulated points can be redeemed for rewards in cash or kind. Use your
card in a manner that helps you get the best out of the rewards and
benefits you are eligible for.
Pay your credit card bills on time
This
is well-known, yet many ignore this advice—with dire consequences.
Credit cards impose a very high interest rate on outstanding balances.
So if you do not clear your credit card dues on time, you would have to
pay heavily. Moreover, defaulting on your bills also hampers your credit
score. To avoid additional interest outgo and to maintain your credit
score, pay your bills on time.
Don’t settle for minimum payment
It’s
often mistakenly believed that making the minimum payment on your card
dues is sufficient. To avoid penalties, you must pay your bill on time.
But to avoid heavy interest rates, you must also pay the bill in full.
Don’t pay attention to the minimum dues, and make it a point to clear
your full card balance every month.
Avoid using your card at an ATM
Credit
cards allow you cash withdrawals from ATMs. Avoid using this facility.
Though allowed, ATM withdrawals attract heavy charges. You wouldn’t want
to pay that, would you?
Ask yourself if you need that co-branded card
Many
brands like to tempt you into signing up for their co-branded card. For
any co-branded card to be useful, your consumption of that particular
brand needs to be very high. Such is their reward structure. You should
examine the rewards carefully before signing up for such cards. If a
card helps you in your lifestyle, you should opt for it.
Keep your credit card details secured
Scammers
keep finding new ways to defraud credit card users. One must educate
oneself and be aware of new threats. As a basic measure, always keep
security details such as security pin, CVV number, OTP, and expiry date
private and secure. When handing over your card, always know where it
is. Careful not to swipe your card in any place except POS machines and
ATMs. An unsecure swipe could lead to your card being cloned and
misused.
Pay attention to the joining and renewal fees
Credit
cards often have joining and renewal fees. However, there are cards
which have no fee. When looking for a card, pay attention to the fee
structure. The fee should be reasonable and should be outweighed by the
card’s benefits. Moreover, many cards allow a fee reversal if you spend a
certain amount annually. Look out for this reversal benefit to save on
the annual fees.
Scrutinise your credit card bill
Besides
paying your credit card bill on time, scrutinize the itemized bill
carefully. Understand which charges are mentioned in your bill before
clearing your dues.
Avail a loan if required
Credit
cards also allow unsecured personal loans based on your credit history.
If you require financial help, don’t look for loans elsewhere. Use your
credit card to avail one.
Credit cards are a necessity in many
ways. Who wants to carry cash when a card can replace it? Credit cards
score over debit cards because of the reward points and the ease of
conducting transactions even in a financial crunch. Take time to
understand your card’s fee structure, interest rates, penalties, and
reward structure.
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