Make the optimum utilisation of your credit card

Credit cards can be a convenient way to acquire life’s necessities and luxuries. But it comes at a price in the form of interest rates which, when compounded over a long period, can add up to a huge sum of money. If planned well and implemented with discipline, you can actually enjoy the benefits of credit cards otherwise they can also become financial nightmare when used inadequately. Let us go through some best ways of using a credit card:

Monitor your spending habits

Here, you get credit while you go spending or paying bills. You can use the credit limit to purchase anything you desire. But consumers often tend to over limit while using credit cards; it also puts you under pressure as a portion of your monthly income is truncated towards paying the EMI. So, keep a check on your credit card spending and avoid debt trap.

Don’t keep many cards

The more credit cards you have, the more you may be tempted to spend and the more difficult it will become to keep a track of how much you have spent and when the repayments are due. Ideally, they should be used as a temporary substitute for carrying cash. And, if that is the only motive you have when you carry a credit card, you will find that having one or at most two is quite sufficient.

Immense usage

Make the best use of credit cards while making every possible purchase even regular items with it like online purchases, bills, groceries etc. This will lead you keep a budget of your day-to-day expenses while maintaining a record. In this way you can earn maximum credit points as well.

Say ‘No’ to borrowings on cards

Just remember that credit cards are easiest way to acquire what you needed at given time but it can lead you in trouble also at the same time. They are not an additional source of money. If you get shortage of money, it’s better to avail a personal loan rather indulging in cash withdrawals through credit card. As the interest rate on personal loan is less in comparison to revolving credit on credit cards facility.

Terms and conditions

Be it a credit card, the devil is always in the details. The small print, i.e. carefully worded clauses, sets the terms and conditions of your loan, including the schedule of EMIs, the interest rate calculation method, charges and penalties in case you deviate from your repayment schedule. Unfortunately, many borrowers don’t spend much time on it and this leads to troubles later on. It’s better to read it seriously and understand it well.

Avoid paying card surcharge

It’s an important policy that merchants are not permitted to demand surcharge on customer purchases. So, neglect paying a card surcharge.

Reward points and cash backs

Whenever possible try to make the use of reward points and cash back. But do remember that you take them as an additional bonus and do not get tempted with them.

Examine your credit limit

It’s wise to have always maximum credit limit as to shed the situation of uncertainty. It’s prudent to implement self-discipline on available credit limit on your card. And try to avoid offers to increase the credit limit on your card.
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Source: Secondary