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A credit card is a form of payment card issued to customers for enabling them to make payments to merchants for goods and services. It allows users to build a continuing balance of debt, which is subject to a certain interest charged by the bank. Therefore, users get to buy things and pay for them later. All credit cards come with a specific limit which is set by the issuer based on your credit score and your eligibility criteria.
When it comes to using a credit card well, knowing what a credit card is, isn’t enough. You should also know how to use it well.
Here are 6 tips to help you use your credit card effectively.
Track your spending
Credit card statements record every transaction you make and the subsequent fees or interest you are charged on it. By tracking your spending, you can keep track of expenses, make payments on time, and avoid piling up debt.
Take time to understand rewards
Credit cards offer users reward points on certain spends. Some high-end cards may also come with guaranteed benefits and gift vouchers, such as free access to airport lounges. Some gifts may also be provided on joining, while others offered as a part of periodic benefits. Accumulated points can be redeemed for rewards in cash or in the form of offers and discounts. Use your card in a way that helps you get the best out of the rewards and benefits.
Keep your credit utilization ratio low
Try keeping the balance on your credit card less than 50% of the credit limit. Carrying high balances on credit cards (more than half of your total credit card limit) can adversely affect your credit score. If these high balances are carried over to the next month, the interest outgo will increase.
Check your statements carefully
Ensure that you check your monthly statements and understand the charges levied. Keep a watch out for any suspicious transaction.
Pay your dues diligently
Cardholders are imposed with high credit card interest rates and penalty fees for outstanding dues and late repayments. To avoid paying heavy interests and penalties, make sure to pay out full outstanding dues on time. This will also improve credit ratings.
Keep your credit card details secured
Scammers keep coming up with new ways to defraud credit card users. To counter such elements, educate yourself and be aware of new threats. Keep security details such as your security pin, OTP, CVV number, and expiry date private and secure. When handing over your card to someone, always keep a watch on it. Swipe your card only at POS machines and ATMs you can trust.
With the above tips, you should be able to manage your credit cards smartly. You can go ahead and apply for a credit card and enjoy the benefits and rewards that come with it.
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.