We have written many times about how useful a credit card is. Recent demonetization and booming e-commerce transactions have increased the usage of plastic money. Improper use of a credit card can often land you in financial troubles. We bring you, pointers that will help you make the best use of your credit cards.
1. Stick to your limits: Each credit card comes with a credit limit. It is good to adhere to your credit limit and not overspend on your cards. In fact it is good to have a credit card utilization limit of 40-50% of your limit only. Over usage of your card often can end up costing your credit score.
Additional Reading: 6 Things NOT To Do When You Apply For A Credit Card
2. Do not use for cash advances: Credit cards can also be used as ATM cards to withdraw cash. But it is extremely important that you are aware of that cash advances on credit cards do not have grace period unlike a transaction used for purchase online/offline. They are charged interest from the day of withdrawal till the repayment, in addition to other charges.
3. Avoid credit rollovers: Credit card statements come with a Minimum Amount Due which would be around 5-10% of your entire outstanding. Do not be mistaken, paying minimum amount due doe not dissolve you of the responsibility of paying the rest of the outstanding amount. The unpaid amount is charged an interest right from the date of usage till the date of repayment, if the total outstanding amount is not paid on due date. Moreover, all further usage of the card starts getting charged interest.
4. Know the terms and conditions of your card: When you receive a credit card from your lender, you also get a small booklet of terms and conditions. The same is available on the website of your lender. Take time to go through the same and understand the interest charged, grace period, charges on cash advances, late payment fee etc.
5. Your credit limit is inclusive of all dependent cards: You might have got a dependent card for your spouse, one for your child in college and for your parents. Be aware that your overall credit limit is inclusive of all cards. Each card does not have individual spending limit to the extent of your credit limit. Therefore it is good to monitor their usage.
6. Do not spend just for points: When you see a rewards redemption catalogue , it is tempting to see holiday vouchers, shopping vouchers etc and much more that you can get against redemption of points. It is wise to make use of available points to get them and not spend more just to earn some points.
7. Make the best use of co-branded cards: Depending upon your use of credit cards, you could go in for co-branded credit cards. These cards come with special offers and reward points on certain transactions.
8. Know about balance transfer: Unknowingly, many of the individuals do get into the credit card rollover trap. If the debt goes overhead, then balance transfer to another card might be an option. Also settling for clearing off debt as EMI might also help avoid those high-interest charges.
9. Keep a check over statements: It is very important to keep a check over your credit card statements to keep a tab over your spending. It would also help you to analyze your spends and keep an eye over any fraudulent transactions against your card.
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