Credit Card Tips to explore it in 14 different ways
A credit card is an important tool today we can have to ease our financial needs. Credit card is used widely but you must be sure about how to use this card efficiently, as transactions on a credit card can impact your credit score and which in turn can lead to problems in other financial instruments like loans in the future. So here we will discuss some credit card tips on how to maintain a good credit history to let you be accessible to all the market instruments available. So if you are new to this world of credit cards than surely these credit card tips will give you a good experience with card usage:
1. Never ever use your credit card to withdraw cash on the ATM machine, as a debit card. A credit card provides you a facility to withdraw cash but this particular facility must be kept for emergency only. The reason behind this suggestion is simply that once you made a withdrawal at ATM, the company will impose heavy charges in your bill which sometimes may shoot up to 36%.
2. Use your credit card efficiently and make a habit of not exceeding the spendings on card beyond 30% of the credit limit of the card. If you do so, surely it will badly impact your credit history which is an important parameter for accessing other facilities like loans in the future. Then also if your spendings are more than the credit limit, you can approach the company to increase your credit limit anytime, but it is purely a company that decides whether to increase the limit or not.
3. Pay your complete bills on time and never go for late payments. Because this type of behavior by customers can also severely affect the credit score of the cardholder. To achieve this target you can opt for an auto-payment option for the card. In this way amount of the bill will automatically get debited from the bank accounts on or before the due date. Mark this as most important among all the credit card tips we are discussing here:
- Just make sure that you set the date of auto payment prior to the due date of the credit card. In this way, you will be safe from any late repayment of bills by the company.
- Your bank account must have sufficient balance to get deducted for the bill payment.
- while giving authorization for auto-debit to the credit card company, you should go for paying the full amount of the bill through auto payment and not the minimum amount due ( a trap discussed in other blogs).
4. Be financially disciplined and never go for purchasing the thing which you can not afford. because by having a credit card, you can purchase it on credit but later you only have to pay. And if you can’t afford it, it will become a burden on your pocket. It will lead to late payments or even default payment at the part of the cardholder which invites penalties in the future.
5. Go through the monthly statements carefully for any default payment or any other discrepancies. Generally, people don’t watch their statements of card and simply pay the bills which to be avoided. Because statements are system generated and systems are not fault-proof, which can indicate false transactions on the card which the customer not even transacted.
In recent times cases of cyber fraud like online money transfer etc have significantly increased, so it should be your duty to check your messages every time transactions completed.
6. If you have completed any transaction with the card while shopping at the market, fuelling, or for any other purpose, keep the slip of purchase made, safe with you so that it can be cross-checked with the statement for any extra charges. Sometimes a company may levy some hidden charges on the card utilization which can be traced by having these statements safely with you for the billing cycle.
7. You must be having all the details handy regarding your cards like card number, issuing authority contact, and any other info so that in case of any discrepancy or theft/ stolen of the card, issues can be raised immediately. In the case of Theft or you found some wrong transactions, immediately report it and block the card and reissue it later. Because maximum credit cards are backed with a guarantee of some amount and you will not be held responsible for any fraudulent activity through your card provided you reported the same timely. So timely reporting the fraud on the card can save you from any extra charges.
One more thing you can do is to start monitoring your card transaction by internet banking or mobile application. Through this, you will come to know about any fraud instantly and can report it timely.
8. You must be aware of the interest rate for different transactions and late fees if any, prior to issuing the card. If not, do make sure to get it to know for future transactions so that any wrongdoing be avoided. Once the transaction is completed, there will be no remedy to reverse the charges.
9. Never use a credit card for the things which you can not afford. Because while swiping the card, you don’t understand the implications but when you have to pay your bill, it becomes a burden. Ultimately it will lead to a default on the payment side or late payment which in both cases attracts heavy charges. So its better to set a limit according to your paying capacity while swiping the card at the merchant desk.
10. Redeem the rewards timely, offered by the credit card company for utilization of card. Rewards are offered maximum for reward credit cards but that does not mean you have to purchase reward credit cards only for earning rewards. Because other cards also have rewards associated with the usage of cards and you should try to maximize those rewards. You can maximize the rewards or points by making purchases on the specified outlets which offer high rewards comparatively.
Once you collected the reward points, you must understand the reward program completely before applying for the redemption of points. You should not let your points go into the waste box, so better to explore the opportunities where you can redeem the points. You can redeem your points for purchasing gifts and for online shopping as well.
Some credit card offers your redemption benefits while checking in hotels while you are on a trip which will help you in booking cheap hotels. So while you are planning a trip, you must have due attention for the rewards as well.
One thing that is important to mention here is that some reward points come with expiry dates and you must check the expiry date priorly. If you don’t use the points before the expiry date, you will lose the points. Expiry dates for the rewards points are mentioned in the monthly statement of your credit card and you must look for their details.
11. Use your credit card less for its monthly credit limit and it is generally suggested to restrict your usage limit up to 30% of the credit limit provided by the company. Suppose you have 50K as your credit limits, so you must spend up to 15K monthly. By spending up to this limit or even less will have a positive impact on your credit score.
Because credit score is in one way connected to the usage pattern of you through credit card. If you use your card to a maximum limit, that simply reflects that you are heavy on debt every time and it can generate a foundation that it will take long for you to pay off.
12. Download the Application of the credit card on your mobile which is provided free by the companies for every mobile operating system. By having a mobile application, you can do many great things like accessing monthly statements, making payments online, accessing the transaction in real-time. By doing it, you can spot the frauds or wrong charges on your card timely and report it well within time.
13. Use something Extra: Every credit card offers something extra with the normal usage limit and reward points. You must look for those offers in your mailbox continuously and also some offers are already attached to the card for a time period. some of them are like free movie tickets, free lounge access, extra cashback on some online shopping, travel protection plan, etc.
14. Pay the complete bill of credit card and never miss the due date. Delay in payment or missing it will invite heavy charges by the company and can create an imbalance in your budget. Also while paying the bill, you got two options, first to go for complete bill payment while the second one is to go for the minimum amount due payment.
It is highly recommended not to go for paying the minimum amount due as it will in turn attracts heavy penalty in the future. This trap of vicious cycle of the minimum amount due is already discussed in my other blog on Top 6 things on credit card and you must go through the same to understand it completely.