How to Use Credit Cards To Get Maximum Benefits
Credit cards have become common these days, every 8 out of 10 people own a credit card. This is a great financial tool when you want to build a good credit history. However, owning a credit card and using it are two different things. On using a credit card carelessly you can easily end up in a debt trap. Before applying for a credit card you must know how to use credit cards and how you can make the most out of it. In this article, we have listed down a few tips that you can consider while using a credit card in order to maximise the benefits of a credit card.
Tips for maximising the benefits of a credit card:
- Selecting the right credit card for yourself: The is the initial stage from where your work begins. Selecting the right credit card is the essential decision. You need to analyze your needs and spending habits. Then you have to decide the type of credit card that will suit your profile best. After this you will have to compare credit cards in order to arrive at a decision. This can be pretty much tiresome but choosing the right credit card is the first step towards maximising the credit card’s benefits.
- Pay bills on time: Paying credit card bills is one of the most important step in handling a credit card with caution. You can never miss the due date and frequently defaulting in the payment of credit card bills have a negative impact on your credibility. In order to pay the bills on time you can register for the auto-debit services so that you do not have to worry about remembering the due dates.
- Avoid paying the minimum due amount: While making the decision to apply for a credit card you will hear all the myths revolving around it. Credit card myths can become the biggest hurdle in your way because one of the myths is that you can pay the minimum due balance to avoid the interest charges. But that is not the case. You need to understand that carrying the balance from one billing cycle to another only attracts high interest charges. Do not fall into this trap and pay your credit card bill in full.
- Avail welcome perks and bonuses: On some credit cards to unlock the welcome benefits you need to make the first transaction within a stipulated time period. This will help you in maximising the benefits of your credit card. Also, you get the opportunity to earn the bonuses on spending a predefined spend limit. Availing of these perks and bonuses will let you maximise the credit card benefits.
- Trck credit score and credit utilization ratio: This is the most helpful tip while maximizing the benefits of a credit card. Tracking your credit score will help you understand better where you stand as you would know whether your credit score is increasing or decreasing. Credit utilization ratio is the one that helps in building a good credit score, a high credit utilization ratio will affect your score badly whereas a low ratio helps in improving it. For this you can set the threshold limit as on reaching it you will be notified so that you do not overspend.
- Earn and redeem your reward points: Know your credit card better on which transaction you earn the reward points and start using your credit card for those transactions only. You cannot use your credit card for every transaction as it will increase our credit utilization and the chances of using a credit card beyond the provided limit increases. Now, another way to maximise the credit card benefits is by redeeming the reward points. Reward points have a validity period and you need to redeem them in that period only since you won’t be able to redeem them after they expire.
- Check your credit card statement regularly: You need to check your credit card statement regularly to maximise the benefits. On checking regularly you will know whether any kind of fraudulent activity has happened on your account or not. If it has then you can report it immediately as any error or omission can have a negative impact on your credit history.
Bottom Line
With a parting thought, using a credit card wisely can only help you in maximising the benefits of a credit card. Following above-mentioned tips will surely help you in deriving the most out of your credit card. There is a wide range of best credit cards in India and choosing one can be overwhelming. You can choose the right credit card by analyzing your spending habits and needs, also by comparing credit cards online. Keeping your credit card dues clear and a low credit utilization ratio will help you a lot in maintaining a good standing account.
Share your tips on how one can maximise one’s credit card benefits.
Additional Reading – Everything You Need To Know About Credit Card Reward Redemption
