Credit cards have unquestionably become an essential part of our daily lives. However, not many people know how to exploit their potential.To help you understand how to use credit cards wisely, we’ve made a little checklist you can go through. Take a look:
Set Your Budget
In order to manage your finances, set a particular credit limit for yourself. If you are a spendthrift, reduce your credit limit or opt for multiple cards. This way you can split your expenses across those cards so that the amount spent on each one gets reduced.
Advantage– This way you can monitor your expenses from time to time.
Pay Back On Time
Borrow only as much as you can repay in time. Moreover, you should make it a practice to pay your bills on time as your credit score primarily depends on that. We’re sure you don’t want to incur additional charges for delayed payment.
Advantage– Timely bill payments will enable you to build up a trust factor with your bank, lender.
Safe Usage Of Credit Card
Nowadays credit card frauds etc. are on the rise. Where credit cards come with their own share of benefits, their safety concern is a major issue. To prevent your private information from getting leaked it is essential to check your account statement regularly. Remember not to share such information with anyone else. Moreover, in case of loss of the card, report should immediately be sent to the company.
Advantage– This way you can keep a track of all your transactions and identify if there is any unwanted activity or transaction that you do not recognize.
Track Your Credit Report
Keep a check on your credit report. It helps you recognize errors like incorrect personal information, unauthorized accounts or transactions, duplicate or unusual charges levied etc. Your credit report is also the foundation of your credit scores. Your credit scores play an important role in getting a credit card application approved. (What is a credit score?)
Advantage– You can easily monitor the entire amount you owe, mistaken transactions or fraud, tracking your bill payments etc. All this is the ultimate source of your credit score.
Think Twice Before Closing Your Account
It’s equally important to keep using your card from time to time. Cancelation of an unused card or closing an account can decrease your credit score. This is because the longer your credit history is, the more lenders are going to trust you with the repayments.
Advantage– Not closing your account will ensure that the amount of credit available to you will not decrease. This will maintain the ratio of available credit to the credit card that you’re using. It plays a major role in deciding your credit score.
Make Use Of The Rewards And Benefits
There are different types of credit cards like travel credit cards , fuel credit cards, airline credit cards etc. which offer you reward points as per your requirements.Paying monthly bills and purchases gradually piles up sufficient rewards that can be redeemed on airline tickets, discount offers on various items, shopping etc.
Advantage– You can choose a rewards program as per your requirements and use your credit card wisely to spend on travel, shopping etc. You can save more by way of redeeming these rewards for useful services. Cashback credit cards are tailored especially to benefit those looking to save when they spend.
Know more about how to Redeem JP Miles for free airline tickets and cabin upgrades.
Watch Out for Hidden Fees
Many credit card companies levy hidden fees which the customer realizes while paying the bill. So, one should ideally look out for things like processing fees, late payment fees, transaction fees, balance transfer fees etc. For instance, for balance transfer, these companies offer low interest rates for a limited time period (6 months- 1 year) after which these are reverted to much higher rates.
Advantage- You can save your hard-earned money and prevent yourself from any unnecessary frauds or additional fees if you watch out for any such hidden charges.