Here are 5 smart tips to make the most of your credit cards
Many credit cards offer the ability to borrow money and a variety of other benefits. The question is still: How do you make the most out of your credit card?
Credit cards are often viewed as a ticket to debt. However, this is unfair as getting into debt is often your conscious decision, which is usually a result of overspending.
Many credit cards offer the ability to use plastic money and a variety of other benefits. A credit card offers many benefits, including simplicity, convenience, rewards points and bonus points.
The question is still: How do you make the most out of your credit card?
These are five ideas to help you manage your credit wisely and prudently.
The card can be incorporated into your core need.
Most credit cards are purchased to meet a core need. Your card should be used only to address that. A household must spend enough money to buy groceries and other daily necessities. Credit cards offer discounts and bonuses on purchases for utilities such as groceries. Another example is that if your car needs to be driven long distances, it will cost you more fuel. Due to the rising fuel prices, you don’t want to pay an additional transaction fee of 2.5% when making a card payment. You should choose a co-branded Petro card to credit your account with the charges automatically. You can also get bonus points if you shop online. Find out what you need, and then apply for a credit card.
Don’t withdraw cash from your credit card.
This is the biggest mistake most people make. Although your credit card allows you to withdraw cash, this should only be used in extreme circumstances. An additional 3-4% service fee is when cash is taken out of your credit card at an ATM or branch. These transactions can be subject to a minimum charge anywhere from Rs200-1,000. This is an enormous cost. You also have to pay GST and interest on withdrawals. This option is strictly forbidden as it is uneconomical to pay cash.
Redeem your reward points at the right time
You will often receive emails and messages regarding your credit card reward points from your bank. These reward points expire after a certain period. If they are not used within that time, they become worthless. These points can be redeemed online or at a select number of outlets. This is one of many benefits to a credit card. Please make the most of it and make sure you get the most out of your points.
Keep track of all invitations you receive as a premium cardholder.
Credit card companies love to pamper premium cardholders. Banks like Citi, ICICI and HDFC offer their premium ‘coral and signature cardholders special events and concerts. This is a great way to meet like-minded people and grow your social circle as a credit cardholder.
These are great opportunities to meet the right people in a casual setting. This additional benefit is available only to the most elite categories. It sometimes includes access at premium airport lounges. Make the most of these benefits.
Make your monthly budget with your credit card.
This is a somewhat controversial issue. Do you need to use your credit card for all household purchases? This strategy has many advantages. It is possible to use a credit card today to pay for all your household expenses. The monthly credit card balance can be paid each month. You can also get reward points and bonus credit for using the card.
We now come to the last and perhaps most frequently asked question. Do you have to pay all outstanding credit card balances each month, or should you just roll over and pay the minimum 5%?
Apart from paying your bills on time and in full, the best option is to keep your credit card balance at 30% or less of your card limit. This will improve your credit rating and increase your CIBIL score. You will also be able to enjoy a lower interest rate on any remaining bills. Avoid falling for the 5% rollover trap. The costs will eventually be too high to match the benefits. You should pay as much each month as possible.
Credit card companies want people who can pay their bills on time. It is up to you to decide how much extra you want to pay in addition to or below the minimum monthly payment when your credit card statement arrives at the end of each month.
