Understanding What Is Credit Card And How To Use It Smartly
October 09, 2019
The number of credit users has increased significantly. While getting a Credit Card has now become easy, not many people know how to make the most of it. This article gives you valuable tips on how to use it smartly.
What is a Credit Card?
A Credit Card is a financial instrument that allows you to avail of credit on all your financial transactions. In simple terms, a Credit Card is a debt instrument that allows you to buy things now and pay for it later. All Credit Cards come with a specific credit limit, which is set by the issuer based on your credit score and your eligibility criteria.
How to use Credit Card smartly?
Get a higher credit limit
The maximum credit limit sanctioned to the Credit Card users differs from user to user based on their eligibility criteria, and the credit score. When you apply for an online Credit Card, ask the issuer for the highest possible credit limit. Apart from increasing your purchase limit, the higher credit limit will also improve your credit score.
Understand the rewards
Most Credit Cards in India come loaded with a host of reward programmes and offers on a certain type of spending. Some high-end cards provide free access to the airport lounges, while others provide additional reward points on purchasing grocery or fuel recharge. Do your research well about the reward point system and use the card strategically, so that you get the best out of the rewards and benefits.
Pay your dues diligently
Credit Card companies impose high-interest rates and penalty fees on outstanding dues and late repayments. So, to avoid paying those heavy interest and penalties, make sure that you pay out dues on time. This will also improve your credit ratings.
Don’t use a Credit Card to withdraw cash at an ATM
You can use the Credit Card to withdraw cash from the ATM. However, it is advisable that you avoid using this facility unless it is an emergency. ATM withdrawal attracts heavy Credit Card interest rates.
Don’t just pay the minimum amount payable
A lot of people have this wrong notion about Credit Card payment that paying the minimum amount is enough. However, the Credit Card issuers charge a hefty interest on the balance amount. So, to avoid paying those charges, you must try to pay the dues in full every month.
Check your statement carefully
Apart from paying your bills on time, make sure that you scrutinise your monthly statement and understand what charges are levied in your bill. Also, look if there is any suspicious transaction. This could be because of Credit Card fraud. Never share your Credit Card details with anyone.
Use your card only at trusted stores
If you use your Credit Card for online purchase or buying things from a local store, make sure that the retailer is a trusted one. This will minimise the risk of your Credit Card identity theft.
Now, that you know how to use Credit Card smartly, you can apply for a Credit Card online and make the most of it.
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