Thursday 7 March 2019

12 Mind-Blowing and Easy Tips to Use Your Credit Card Wisely

Many people think using credit cards means jumping into a dark abyss. Everyone wants to avoid credit card debt. But, judicious use of credit cards can take you out of many difficult situations. You can build up your credit score.

A good credit score will help you to get loans at lower interest rates. However, for that, you need to follow certain easy and smart tricks highlighted in the blog. So, are you ready to learn?

Mind-Blowing and Easy Tips to Use Your Credit Card Wisely

Pay off Balance:

Firstly, paying off the credit card balance monthly is important. In fact, this is the only way to keep yourself away from high interest rates. Never fail to pay the balance. Otherwise, you’ll end up spending more. Credit cards of some banks demand high penalty rates for skipping the monthly payment. However, paying off the full statement balance may be tough for you at times. In such situations, try to pay at least the minimum amount. Missing a single payment means a significant drop in your credit card score.

Consider Financial Status While Purchasing:

Never purchase more than you can afford using your credit card. If you don’t have enough balance in your credit card, pay in cash. Avoid buying impulsively with your card. Don’t get trapped in a debt spiral by going on buying beyond your affordability.

Track Your Purchases:

You may accidentally get into credit card debt. To avoid it, check the credit card report every month. Buying small items may seem okay to you. But, when you calculate the overall cost of buying them, it will sneak up on you. So, it’s better to use your card only for heavily priced items. Pay in cash to buy other items.

Set Some Limit:

Every credit card has a spending limit. But, if you don’t have any controlling power, ask your bank to give you a card with lower limits. It may not sound good to you. However, this is a great way to stop your spending habits. Moreover, look for perks that you can enjoy using the card. Also, avail the rewards it is offering. There are various kinds of rewards like cashbacks, discounts on plane tickets, hotel loyalty points, and so on. Take only those rewards that you can pay completely and you don’t need to pay the interest.

Pay the Interest Timely:

Make the payments on time without a miss. Though you know its importance yet if you remain engaged in some other work, you might forget to pay the balance on time. Give priority to paying the bills of credit card monthly on time. You can set up a notification on your smartphone to get reminded about the payment every month.

Understand Customer’s Agreement and Closures:

Read your customer’s agreement and closure thoroughly. Make sure that you’ve understood every word written there. Go through the fine print after opening a new account for a credit card. Understanding the terms is important to know the bank’s rules and regulations regarding your chosen credit card. It will tell you everything such as the payment date, interest rates, penalty charges, and other needed information. If you didn’t understand any of these agreements, feel free to clear your queries. Never sign any agreement without understanding.

Check Monthly Statements Thoroughly:

Many a time, transaction and billing mistakes can occur due to various reasons. So, spend some time to check the credit card monthly reports properly. Find out the mistakes or errors. Ask the professionals to resolve the issue immediately. Sometimes fraudulent activities like identity theft can also lead to major mistakes in your credit card report. Ultimately, it will harm your financial status immensely. Therefore, it’s better to take action when you still have time on your hands.

Avoid Using Your Credit Card Over the Sea:

Involving credit cards to do transactions abroad is fine. But, it is a costly affair indeed. You’ve to pay certain conversion charges while using the credit card abroad. Besides, if you’re using the card at any ATM, you’ll end up paying more. Most of the time, these conversion charges range somewhere between 3-5%. However, there’s a way out. You can use Forex card to enjoy reduced costs of items while traveling overseas.

Never Close Old Credit Cards:

Did you know that 15% of your credit card score is calculated based on your credit history’s length? If your credit history is long enough, your credit score improves considerably. Additionally, a closed card will lower the limit of your card. Even if you do not increase your spending, the utilization ratio of your credit card will increase automatically.

Don’t Ignore Annual Fees: 

Scoff at giving $75 out to keep the credit card? Well, you shouldn’t. Never consider the annual fees. Rather pay attention to the perks like sign-up bonus and many more. When you get juicy cashback for using that card, you won’t mind paying the nominal amount as an annual fee.

Always Choose Credit Card Over Debit Card:

Some credit and debit cards look almost similar. But the way your issuer treats it varies greatly. Moreover, their payment processing methods are also different. You’ll also get more attention from your bank if your credit card is lost in comparison to a debit card. When your bank has to deal with credit, you’re likely to get refunds quickly.

Don’t Share Your Credit Card Details:

Scammers are around. They always look for new ways to hack the credit card details of their users. Update your knowledge about different kinds of tricks hackers are trying. At the same time, they have to beware of new threats. Never share your CVV number, PIN, OTP, or expiry date with anyone. Try to swipe the cards only at ATMs and POS.

Strictly follow the steps shared above. Using credit card isn’t a bad thing, if you’re using your brain. Just make sure that you’re on the safe side even while fulfilling your needs with it.

In conclusion, while credit cards can be daunting for many, they can also be powerful financial tools when used wisely. By following a few simple yet effective tips, individuals can harness the benefits of credit cards while avoiding common pitfalls like high interest rates and debt accumulation.

Key strategies include paying off the balance in full each month to avoid interest charges, tracking purchases to prevent overspending, and setting spending limits to stay within budget. Additionally, understanding credit card agreements, checking monthly statements for errors, and avoiding unnecessary fees like annual fees can further optimize credit card usage.

It's also essential to prioritize security by safeguarding credit card details, avoiding sharing sensitive information, and being vigilant against scams and fraud.

Ultimately, with careful planning and responsible usage, credit cards can not only provide convenience and flexibility but also help individuals build credit, access rewards, and navigate financial challenges with confidence. By adopting smart credit card practices, individuals can leverage these financial tools to their advantage and achieve greater financial stability and success.

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