Credit cards help you pay for things in a way that spreads out your payments so you can afford more in the long run. They also make it easier to spend money impulsively. If you don’t use them responsibly, a credit card can be a major drain on your finances. A credit card, when used properly, can be an effective and simple way to build a credit history or maintain a solid score. However, some people get stuck in the cycle of using credit cards for quick cash and then being unable to pay those receipts off. This can lead to accumulating more debt and damaging your credit score.
Many people who have never carried a balance on their credit card suddenly find themselves paying interest charges that total in the thousands of dollars every month. The sad news is that it often does not take long for a situation like this to develop, so take steps to make sure you do not cut corners if you want your debt payments and other expenses to stay under control, always.
Get the Best Out of Your Credit Card
So let’s cut to the chase and jump to the matter to discuss some crucial tips to make your Credit Card journey smoother and better:
Be on Time with Your Bills: Your credit card has a lot of great features, and whenever you can use your card to make purchases, it can be really nice. There’s just one problem: if you don’t pay the charge off at the end of each month, you could end up paying a lot of money in interest. Avoid paying interest by always paying the full balance on time, every time.
Avoid Your Wants and Spend on Your Needs: The first thing to do is know your credit card. Many people use their credit cards more than they should. Make sure you’re not spending beyond your means, or you will end up paying a high price in the long run. Over time, purchasing even the smallest thing on a credit card can be detrimental to your budget. The best way to control spending is by using the card for basic needs only and not for wants.
Make the Most Out of Your Interest-Free Period: The interest-free period is a time of grace that allows you to pay off the amount owing without any interest charges. With some credit cards like ICICI Bank Credit Card, you can enjoy a 45-day interest-free period on purchases made with your card. This means that if you spend any money on your card during this time period, there will be no interest charged. But you must make sure to pay the bill on time, or you will be charged interest.
Mind Your Credit Limit: A Credit limit is an amount that a customer can spend in a particular financial year as per their existing credit card contract with the bank. The credit limit is The maximum amount of credit that a customer can borrow (may use it or not) based on payment history, income, and other important factors, as per their current contract with their bank. It’s important that you spend only as much as your credit limit allows you to. You might be able to handle the minimum interest payments in case you exceed your limit, but dealing with the additional charges put up by the banks can be a lot of trouble.
Don’t Overlook the Other Charges: Paying your credit card bill without taking a look at the statement is not a good idea because you don’t have an intimate understanding of what additional charges or fees have been levied, and it may come as a rude shock to you when you get your credit card statement. Always read your credit card statements thoroughly every time you get them; this will help you keep a strict eye on any extra or hidden charges that slip in.
Invest in Reward Cards: Rewards cards are a great tool to help you save money and stretch your budget. Not only do they provide added security, but they also give you added incentive for using a credit card instead of paying cash. Rewards cards are quite generous in offering rewards. You’d be surprised at the number of perks you can receive, especially when using a credit card that’s linked to a cash-back rewards program.
Never Miss a Payment: You may be wondering, “Why to pay my bill every month if I can pay the minimum amount?” Well, if you do this, you’ll never get out of debt. Your credit card company adds accrued interest every time a balance is carried over from one statement to another. The longer your debt goes unpaid, the more damage it does to your credit score.
Wrapping it Up
Credit Cards can definitely be helpful, but as we all know, using them the wrong way can also get you into a lot of trouble. If you want to reap the benefits without suffering from the costs, there’s no better way than to spend responsibly.
FAQs
If you spend more than your credit limit on a credit card, your card issuer might increase the interest rate you pay. If this happens, your other credit card issuers might notice and raise interest rates as well.
To keep your credit score healthy, try to keep your credit utilization ratio below 30% of the total credit limit on all of your credit cards.
If your Credit Card is lost, stolen, or misplaced, tell your bank immediately so they can issue a new Card for you. Do not delay in replacing the Card because scammers may use it to make purchases before you have time to report it missing.