Tips to Use Credit Card Efficiently?

Tips to Use Credit Card Efficiently?

December 5, 2021 By: sonimoney0 comments

To avoid being debt-laden due to unfettered spending on your credit card, keep the below tips in mind:

1. Read the fine print so you’re aware of all the charges and conditions that govern your card.
2. Don’t spend more than you can payback.
3. Avoid putting daily purchases on your card so that you’re aware of how much you’re spending.
4. Periodically check your credit limit and rein in spending when you’ve crossed 40% of your available credit limit.
5. Choose an EMI option for large purchases put on your card to avoid having to pay interest on outstanding card amounts.
6. Always keep at least 40% of your credit limit for emergencies.
7. Plan your purchases and use your card only for planned purchases. Avoid impulse buys on your credit card.
8. Always try to pay your credit card bills in full each month to avoid the interest charges.
9. Never miss a card payment, as this will result in higher charges and a hefty penalty.
10. Approach the bank if you’ve overspent on your card. They could help you devise a pay-back plan with a fixed rate of interest to avoid you falling deeper into debt.

Benefits of Credit Cards:

1. Easy access to credit:

The biggest advantage of a credit card is its easy access to credit. Credit cards function on a deferred payment basis, which means you get to use your card now and pay for your purchases later. The money used does not go out of your account, thus not denting your bank balance every time you swipe.

2. Building a line of credit

Credit cards offer you the chance to build up a line of credit. This is very important as it allows banks to view an active credit history, based on your card repayments and card usage. Banks and financial institutions often look to card usage as a way to gauge a potential loan applicant’s creditworthiness, making your credit card important for future loans or rental applications.

3. EMI facility

If you plan on making a large purchase and don’t want to sink your savings into it, you can choose to put it on your credit card as a way to defer payment. In addition to this, you can also choose to pay off your purchase in equated monthly installments, ensuring you aren’t paying a lump sum for it and denting your bank balance. Paying through EMI is cheaper than taking out a personal loan to pay for a purchase, such as a television or an expensive refrigerator.

4. Incentives and offers

Most credit cards come packed with offers and incentives to use your card. These range from cashback to rewards point accumulation each time you swipe your card, which can later be redeemed as air miles or used towards paying your outstanding card dues. Lenders also offer discounts on purchases made through a card, such as on flight tickets, holidays, or large purchases, helping you save.

5. Flexible credit

Credit cards come with an interest-free period, which is a period of time during which your outstanding credit is not charged interest. Ranging between 45-60 days, you can avail yourself of free, short-term credit if you pay off the entire balance due by your credit card bill payment date. Thus, you can benefit from a credit advance without having to pay the charges associated with having an outstanding balance on your credit card.

6. Record of expenses

A credit card records each purchase made through the card, with a detailed list sent with your monthly card statement. This can be used to determine and track your spending and purchases, which could be useful when chalking out a budget or for tax purposes. Lenders also provide instant alerts each time you swipe your card, detailing the amount of credit still available as well as the current outstanding on your card.

7. Purchase protection

Credit cards offer additional protection in the form of insurance for card purchases that might be lost, damaged, or stolen. The card statement can be used to vouch for the veracity of a claim if you wish to file one.

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