7 useful tips to consider when using a Credit Card

Using a credit card is like taking a loan. The credit card provider gives you a line of credit, which you can use to meet your requirement. You can then slowly repay the debt to the credit card company, along with some interest.

It is vital to stick to your repayment plan, as credit agencies have access to your credit card transactions. Late or non-payment can negatively affect your credit score. Also, ensure that your credit utilization is minimum. If your credit utilization shoots over 30-40% of your available credit limit, it could affect your credit score and future borrowing prospects. Lenders are often hesitant to lend to customers who consistently fail to meet this criterion.

1. Set a budget and stick on to it

Know what you can afford! Though a credit card can help you buy the things you want now, it is better not to use it for purchases you cannot afford to. You can gain reward points on every purchase, but it is not more important than your budget. You can try using a credit to buy what is necessary, but do not exceed your budget if you cannot afford to pay. Once you have used your set purchase limit, stop using the card until you have paid it off on the due date.

2. Pay your dues on time

Paying your dues on time will help improve your credit profile and score. It will also help you gain additional benefits such as offers on personal loans, increase in credit limit, and discount vouchers on purchases. Together, these will help boost your credit score.

3. Use the EMI option for repayment

Most credit cards allow you to convert big purchases into EMIs so that they will not strain your finances. With this option, you can borrow money on your card to pay the item and repay the amount in EMIs for the tenure you have decided. You pay lower interest, for it is calculated at the end of every month. Please note that paying total dues on time is always the best option. Choose EMIs only in case you cannot pay the total dues and are ok with the additional EMI interest and relevant fees.

4. Practice prudence while withdrawing money at the ATM

Cash withdrawals on credit cards might seem like an easy option for consumers in times of an emergency, but it comes at a very steep cost. Such withdrawals are treated like revolving balances and attract the same higher % APR from Day 1. Often players treat the entire purchase balances as revolving, if a customer withdraws any amount in cash. In addition, there is also usually a cash advance fee charged that is typically 2.5% of the cash withdrawal value or Rs. 250- Rs. 500, whichever is higher.

But if you look at the approach IDFC FIRST Bank has taken closely, you’ll realise that the APR is lower-than-the-lowest available in the market today. IDFC FIRST Bank offers its customers an interest free period for cash withdrawals for up to 48 days! Yes, that’s true. i.e. until the next billing cycle on all cash advances. The withdrawal is simply treated as any other credit card transaction or purchase. Also, there is a flat fee of Rs. 250 per withdrawal which makes it transparent instead of complicated calculations.

With such approach towards customers, customer friendly features, and with state-of-the-art systems, banks such as IDFC FIRST Bank customers will have the least reasons to complain and most reasons to be happy.

5. Earn reward points and know to use them

A credit card gives you a lot of reward points. Always be aware of which transactions give you how much rewards, or any specific reward earning limit. These are usually available in your product guides or most important terms and conditions. Also, keep an out for how many rewards are expiring at what juncture. Some credit cards have expiries for reward points. IDFC FIRST Bank credit cards however have no limit on earning on reward points and no expiry as well. They also offer 10x, 3x and 6x reward points for offline and online credit card usage. You can maximise your reward points by learning more about them and then, redeem those points appropriately.

6. Know to use the right card

If you are holding multiple cards, you should know how to use credit card for the right purpose to earn reward points. For instance, if you spend a lot on fuel, use a credit card which gives you maximum surcharge waivers on fuel, if you are using a credit card to shop at specific e-commerce websites, use a card which gives you maximum value in terms of offers & reward points

These are some common tips to follow to maximise the benefits on your credit card uses. Do you want to apply for an IDFC FIRST Bank Credit Card? Click here. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.