Ever Credit cards have become an integral part of our financial lives, offering convenience, flexibility, and rewards. However, to truly maximise the benefits of your credit card, it’s essential to understand its features and utilise them strategically.
Today, we will explore valuable tips and strategies to help you make the most out of your credit card and enhance your financial well-being.
But, before we get in to that let us discuss some risks associated with having and not having a credit card:
Credit cards are one of the most powerful way of build your credit score. Why is credit score important? Because any bank looks upon you favourably if you have a good credit score. You will get loans at better interest rate than a person without any credit history as you have proved your ability to repay your debt on time.
But credit card is also dangerous for those who lack the discipline to pay their dues on time. If you take a credit card and don’t pay our dues on time and don’t pay the full balance every month then it can have disastrous effect on your credit history and your bank will look very unfavourably on you while you approach them for any credit in the future.
Then the rates will much higher for you than someone with no credit history. This is the reason why you should be very careful while using a credit card and if you don’t have a credit card, consider all the important factors, before deciding to get one.
If you are confused about wether you should get a credit card or not, read this. Also remember, effective immediately, all international credit card transactions are now included in the liberalised remittance scheme (LRS), subject to a 20% tax collection at source (TCS). Additionally, individuals using their international debit or credit cards can make payments up to Rs 7 lakh per financial year without any LRS limits or TCS implications.
Now, let us take a look how can get the maximum benefit from your credit cards:
1. Choose the Right Credit Card for Your Needs
Selecting the right credit card is crucial for optimising its benefits. Consider factors such as rewards programs, interest rates, annual fees, and additional perks. Determine whether you prefer cashback, travel rewards, or other incentives based on your spending habits and lifestyle.
If you are a frequent shopper then you can get credit card that offers rewards and cashbacks on various shopping websites, if you are a frequent traveler then you might prefer credit cards that offer offers and rewards on air ticket, hotels and airport lounge access etc.
Many people also carry multiple credit cards, each to be used for a specific purpose but this is very risky especially if you are new credit card user.
2. Understand the Rewards Program
Take the time to understand the rewards program associated with your credit card. Familiarise yourself with earning rates, redemption options, and any restrictions or expiration dates.
You should throughly read the terms and conditions of credit card and know all the fine details associated with the card. You can also compare each of the card to find out the one best suited for you. This knowledge will allow you to accumulate and redeem rewards effectively, maximising their value.
3. Utilise Introductory Offers and Promotions
Many credit cards offer attractive introductory offers, such as zero interest rates on balance transfers or initial purchases, bonus reward points, or waived annual fees.
Capitalise on these promotions by timing your applications and utilising the offers during their validity period.
4. Pay your balance in full and on time
To avoid high interest charges and penalties, it’s essential to pay your credit card balance in full and on time each month. Do not pay the minimum limit and always pay the balance in full to avoid damaging your credit score and unnecessary fees and interest expenses.
5. Take Advantage of Additional Benefits
Credit cards often come with additional benefits such as purchase protection, extended warranties, travel insurance, airport lounge access, and concierge services.
Familiarise yourself with these perks and use them when applicable to enhance your overall experience and save money. Avoid being greedy and spending beyond your means to avail the extra benefits of the card.
You should not be spending more than you would have if you didn’t have the credit card.
6. Monitor Your Spending and Track Rewards
Regularly monitor your credit card statements, track your spending, and keep an eye on your rewards accumulation. This practice helps you stay within your budget, detect any fraudulent activities, and optimise your reward-earning potential.
To understand more about credit cards frauds and how you can prevent them, click here.
7. Avoid Unnecessary Fees
Be mindful of potential fees associated with your credit card, such as annual fees, foreign transaction fees, late payment fees, or cash advance fees.
These fees are generally quite higher than By understanding and avoiding these fees, you can ensure that your credit card works in your favor rather than draining your finances.
8. Use Credit Card Tools and Apps
Leverage technology to your advantage by utilising credit card tools and mobile apps. These tools can help you track expenses, set budgeting goals, receive notifications about due dates and rewards, and manage your credit card usage more efficiently.
You should also track your credit card score regularly. This way you can see the effect any late payment has on your credit score. This is especially important if you have more than one credit card.
Conclusion
Your credit card can be a powerful financial tool when used strategically. By choosing the right card, understanding its features, and following these tips, you can unlock the maximum benefits from your credit card. Remember to use it responsibly, pay your bills on time, and reap the rewards while avoiding unnecessary fees. With careful planning and smart utilisation, your credit card can be a valuable asset on your journey towards financial success.
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