Here Are Five Tips to Help You Make the Most of Your Credit Card

credit card

The inception of ‘plastic money’ as a financial tool transformed the banking & financial services landscape. It was a progressive development that laid the foundations of the modern cashless ecosystem. Today, a large percentage of the working population own a credit card and use it frequently for making purchases. There is a common misconception among credit card critics that it can lead to a debt trap. However, contrary to this popular notion, it can actually help improve the credit score. It all depends on how the cardholder is using the credit card. Timely repayment of dues plays a crucial role in enhancing credit worthiness using a credit card. Read on to learn more about credit card benefits and tips.

Tips to effectively use a credit card

Carelessly using a credit card can land you in trouble. However, planning the purchases depending on the repayment capacity can help reap the benefits. Unfortunately, most people indulge in a shopping spree using their credit cards without worrying about anything. This can lead to a debt trap in the long run if they fail to pay their bills timely. Here are some essential tips to be mindful of while using a credit card.  

  1. Choose the most suitable credit card

The first step to making the most of using a credit card starts with choosing the right card. The best credit cards will offer rewards on the purchases you want to make. The discount offers should be aligned with the spending patterns of the user. In the contemporary era, financial institutions are offering a wide range of credit cards to help users make the most of it. The categories can range from shopping and travel to entertainment and co-branded. For example, if a significant share of your expenses is related to travel, it is prudent to opt for a travel credit card. Similarly, if you prefer purchasing most items from a specific brand, a co-branded credit card is the best option. You will be able to save a considerable sum using these cards.

  1. Keep an eye on signup bonuses 

Most people are unaware of the signup bonuses offered by credit cards. These welcome bonuses are offered in different ways, including reward points, discounts, cashback, vouchers, etc. All these perks can help you save a significant amount of money. However, it is essential to note that not all credit cards have a signup bonus plan. Also, the bonuses offered can differ significantly, depending on the credit card type. Therefore, it is important to compare and evaluate the credit card benefits offered by different cards before choosing one. Always look for signup bonuses that will materialise best and align with your shopping habits. It is a great way to start the credit journey. 

  1. Maintain a healthy credit score 

Credit card users can increase or decrease their credit scores based on how they use their cards. The credit score is a numeric estimate of a person’s creditworthiness and is calculated by evaluating their historical repayment records. Paying the credit card bills payment punctually will add positively to the credit score. However, if you fail to repay the outstanding amount by the due date, it will indicate a poor repayment capacity of the users. You must keep a tab on the credit score to see how it has changed. A positive change means that you are diligent with repayments. On the other hand, a negative change will indicate poor planning. A good credit score can increase the credit limit and offer rewards you usually wouldn’t get. 

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  1. Check the monthly credit statements 

Many credit cardholders don’t bother to check their monthly statements. It can have adverse consequences in case of fraudulent transactions. Keeping a tab on the credit card statements will help evaluate the shopping pattern and history. You can make better decisions related to shopping expenses and other purchases. It also aids in finding out any discrepancies or fraudulent transactions done using a credit card. Most credit card companies offer a period of 60 days to report unauthorised or fraudulent transactions done using credit cards. Not checking the statements can limit you from reporting unauthorised or fraudulent charges. 

  1. Leverage the interest-free period wisely 

Many credit card companies offer an interest-free period to cardholders. It is usually in the range of 20 to 55 days, depending on the card issuer’s policies. A long interest-free period will offer more flexibility in repayment of the due amount. Therefore, choosing credit cards that provide a more extended interest-free period is highly recommended. You can use this period to make high-ticket purchases and repay the amount over the interest-free duration. Planning expenses wisely is crucial to make the most of the interest-free period on credit cards.

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Final words 

Credit cards are an excellent tool for availing short-term credits. These are some essential tips about credit cards to be mindful of to make the most of it. 

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