There are many ways in which one could use a credit card much more wisely than they currently are and this could really increase the chances of enjoying much more reward through them. If you have a credit card, then why miss out the maximum benefits and convenience that it could offer. In fact, not using the card wisely can also lead one to credit card debt and here are some ways to avoid it.
- The first step is to get a credit card and understand their uses. It is a contract between the cardholder and the financial institution and the former may use the card to pay a merchant or withdraw cash based on the assumption that the cardholder will repay the lender a minimum amount by a set time. If the borrowed amount is not repaid on time then interest is charged. As credit cards work on a revolving account system, one does not have to pay the cardholder the full amount each month and there are also interest – free periods that one can enjoy.
- Next, one can keep an eye out for any credit offers. For example, if one is planning to use a card only for emergency purposes then it is good to get a card with low annual fees and even if there are no funds on standby, there is not going to be any trouble. Cards providing reward programs as well as insurance are great for these scenarios.
- It is also important to know exactly how much one has to pay interest if the cards are not paid back on time. One needs to know how long does one have to make the repayment and are their interest-free periods for the cardholder who have paid off their balances in full. Knowing about the maximum credit limit will also help and this is decided based on one’s income and living expenses.
It is important to develop good credit habits so that credit cards do not become a liability.
- This can be done by making a good budget of the inflow and outflow of income each month so that one does not overspend. Apply for the credit card that is within your income limits.
- Paying off the credit card bill each month, in the interest- free period will help you save a lot of money in the long run. One can avoid extra charges this way for sure.
- Credit cards can be used effectively to manage the cash flow and if one needs to pay the bill during each month, pay it within the due date each month with the credit card and then pay off the credit card bill at the end of the month. This will help stack up the points as well. Credit card eligibility is determined by the income so cash flow is one of the first points to consider.
- By managing the debts responsibly, one can make the most of the cards as well. It is important to determine one’s priorities and set up automatic payments so that one can pay any outstanding debts on time. One can also consolidate the debts with the balance transfer.
Be sure to check your credit card statement from time to time and analyze to avoid credit card errors which might be adding to your expenses or not getting you enough points. With pre-approved offers from Bajaj Finserv, one can save a lot of time and hassle and also enjoy benefits on credit cards, personal and home loans and a host of products. All you have to do is share a few basic details and check out your pre-approved offer.
