Applying for a credit card is a big step that one can take. Having a credit card in your wallet makes you financially liberal only when you know how to use it. A credit card is like a double-edged sword having pros and cons so you need to be very careful while using it. You need not worry about standing in long queues to apply for a credit card, as now you can also apply for credit cards online. This makes your work a bit hassle-free. The main thing comes when you start using a credit card, we have listed down a few tips that you can use to make the most out of your credit cards.
- Read all terms and conditions: Before getting a credit card you must read all the terms and conditions carefully so that you know all about the fees and charges that you can incur on using a credit card. You pretty much get an idea of how you can use a credit card after going through the most important terms and conditions.
- Earn reward points: To begin using your credit card you must know which transactions let you earn reward points. You can choose to apply for cash back credit cards or reward credit cards depending on your requirement. After knowing how many rewards you earn on a specific transaction using your credit card for those transactions only. This way you maximise the most out of your credit card.
- Keep your dues clear: To use a credit card you must remember one thing to pay your credit card dues in full and on time. This way you will build a good credit score. If you believe that paying the minimum due balance will save you from paying the interest charges after the interest period is over. But that is not the case, paying the minimum due balance only saves you from the late payment charges and you will be required to pay the interest charges. If you do not wish to pay the interest charges then you must clear the outstanding balance in full during the free-interest period only.
- Maintain a low credit utilization ratio: Another important thing that you must keep in mind is keeping a low credit utilization ratio somewhere between 30% to 40%. This way you build a good credit score. To maintain this ratio you can set the threshold limit so that on reaching the limit you get the notification through an SMS that saves you from overspending. With credit cards, you can go crazy while spending so keep a track of it. You need to use a credit card responsibly to build a good-standing account.
- Check your credit card statement regularly: Keep a close look at your credit card statement so that if you find any error or omission on your statement, you can immediately report it to the card issuer. Otherwise, you will have to face the consequences of these mistakes. Errors and omissions can impact your credit score drastically.
- Report stolen or lost credit card immediately: All the card issuers provide you an emergency customer care number that you can use whenever required. If your credit card is lost or stolen then you need to report it immediately before any fraudulent activity happens on your account. Reporting it immediately can save you from credit card fraud.
- Check your credit score: Checking your credit score every month is a good habit to inculcate. This will keep you informed where you stand and how careful you need to be with your credit card usage in order to build or improve your credit score.
Bottom Line
With a parting thought, using a credit card wisely has more benefits than disadvantages. You can easily build a strong credit history and you won’t have to feel burdened while using a credit card. The above-mentioned 7 tips can help you a lot in being responsible while using your credit card. There are two important things that one needs to keep in mind firstly, keep credit card dues clear always and secondly, keep your credit utilization ratio low.
Share your tips on how one can use a credit card responsibly to maximize the credit card benefits in the comment section below.
