7 Good Credit Card Habits to Adopt
Credit Cards offer the highly sought-after freedom of spending on things and experience, without having to carry around any cash, and without even having any money in your bank account. Moreover, Credit Cards are much more convenient to use when you need a small loan, as compared to a Personal Loan.
As appealing as these aspects of Credit Cards may sound, the truth is, outstanding bills of Credit Cards can accrue astoundingly higher interest rates, ranging anywhere between 15% and a whopping 46%. It is for this reason that you ought to maintain the required amount of financial discipline so as to make the most of your Credit Card. So, how do you exactly do this? Simply, by adopting the below mentioned good Credit Card habits.
1. Use a Card that Complements Your Spending Behaviour
Each of us has a different pattern of spending. While some of us are responsible for paying off the utility bills of the household, some pay attention to luxuriant experiences such as dining, entertainment and traveling for the family.
Depending on your way of using your Credit Card, pick one that helps you accrue the highest rewards on your spends. For instance, if you are on online shopping buff, the HDFC Snapdeal Credit Card might prove to be the ideal pick for you, considering it offers as much as 3X the reward points if you shop on Snapdeal, as against spending the same money elsewhere.
2. Use Your Credit Limit Optimally
When a bank offers a Credit Card, it often states a utilisation limit for the same, which mainly depends on your monthly income as well as your existing credit score. While you are virtually allowed to use the credit limit to the full, doing so often reflects poor financial health and increased dependence on credit. Hence, it is highly recommended that you utilise only 30% to 40% of your credit limit every month. This will help the bank perceive you as a responsible borrower, while also boosting your credit score, over the due course of time.
3. Make the Most of the Interest-Free Period
The time gap from the date of your Credit Card transaction to the due date of the bill payment of the card is known as an interest-free period. Generally, this period varies from 15 days to 45 days, and in some cases can even go up to 55 days. To make the most of this time, and ensure that you have sufficient resources to pay your bill in full, you must plan the most significant expenses in the earlier phase of the billing cycle.
Also Read: 9 Best Credit Cards You Should Own in 2018
4. Always Pay Your Credit Card Bills
Most Credit Card issuers offer the facility of paying a pre-stipulated minimum balance every month while carrying over the remaining balance to the next month. While this may help you avoid paying interest, you will need to pay a late fee. Moreover, in the long run, such a practise will only add to your financial burden. Hence, it is crucial that you pay each and every one of your Credit Card bill on time, and in full.
5. Use Your Rewards and Perks Before they Expire
If you use your Credit Card actively, you will accumulate reward points and other incentives such as flyer miles, discount coupons and even cashbacks over sometime. Once you do, make sure to use these points, and redeem them in a way that benefits you the most. A vast majority of such points and incentives are marked by an ‘expiry date’. Hence, you should use them wheel they last.
6. Keep a Close Eye on Your Credit Card Bills
Whether you opt for a conventional paper bill or an e-bill for your Credit Card, always remember to check your bill thoroughly. In some case, you might find small transactions worth Rs. 100 or even less. Make sure these were made by you. If not, your card details may be in the wrong hands, and the miscreant might just be making these transactions to see if your pay heed. In such a case, you must inform your Credit Card provider right away. This simple habit may save you hundreds and thousands of rupees, which may otherwise go down the drain.
7. Change Your PIN Frequently
While the best way to protect your Credit Card information is to use secure payment gateways, however, even then the safety of this crucial information may be compromised. To ensure that your Credit Card remains safe from any fraudulent transactions, it is highly recommended that you change its PIN once every two months. In addition, you should always keep your card in a secure place to save it from theft.
A Credit Card can prove to be one of the handiest and most accessible credit tools if you use it in an ideal manner. Besides, it can also help you build a good credit score, thus enabling you to get quick loan approvals in the future. So, make sure you make the most of this tool by maintaining the much-needed self-discipline and cautiousness.
Also Read: 5 Best Lifetime Free Credit Cards in India
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