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At one time you used cash to pay for everyday purchases, and a credit card for big purchases, which you did occasionally. With credit cards gaining a lot of popularity, the buying and paying habits of people changed. It is considered to be safer than carrying cash, and gives you great financial freedom.
Furthermore, the use of a credit card offers you several lifestyle benefits such as buying now and paying at a later date, discounts and cashbacks, reward points, and many more. All these make you use your card often.
The circumstances changed and you are in the middle of global pandemic. It is hard dealing with a sudden, damaging financial situation like a cut in a salary or a lay off. If you are in this situation or you fear that you could be, using a credit card judiciously can save you from racking up high-interest debt. Using a credit card prudently saves you from debts. The information given help even those who want to know how to use credit card first time.
Here are the 7 tips to use your credit card in a smart way.
Most credit cards have a grace period, which is a period between the billing date and the payment date. You are not charged any interest during this time if your balance is nil and you pay in full before the due date. A grace period is generally 40 or 50 days and it is interest-free period. If you plan your shopping after the billing date, you can make the maximum use of the grace period.
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. Of course you gain reward points on every purchase you do. You can better avoid it, and set a realistic budget based on your income. You can try using it to buy what is necessary, and 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.
To know how to use credit card and pay the dues on time will help improve your credit profile and score. This will help you gain additional benefits such as offers on personal loans, increase in credit limit and discount vouchers on purchases. These will help boost your credit score.
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.
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 cash withdrawals for at 0% interest up to 48 days! Yes, that’s true. And they offer them up to 48 days of interest free grace period, 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.
A credit card gives you a lot of reward points. For instance, IDFC FIRST Bank credit cards 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.
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 the IDFC FIRST Bank First Select Credit Card to avail a fuel surcharge waiver of Rs 300 every month at fuel stations in India.
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.
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.