You all might be aware of some of them but may not be using it. I would recommend you to start implementing it and you can visit what is a credit card, how it works, how is credit limit determined or where can you apply for the same here. Here are some ways on how you can use credit cards effectively.
1. Stop Buying unwanted goods
Don’t buy goods or services that you can’t buy in cash. Let’s say if you have ₹50,000 in your savings account or will get one before your billing date, do not purchase the product at the moment, as you might end up defaulting the payment and paying interest on it.
2. Convert to EMI
Incase it is important to buy it; you can purchase it and convert to EMI so that you are charged a lower rate as compared to 36%.
3. Avoid minimum due
Don’t get in the trap of minimum due where you may think that you have made minimum due and will not affect your charges or credit score. This will affect a bit on your credit score. Also, you are charged for the interest on the remaining amount.
4. Make full payment
Please make sure you do make full payment by the due date. I would recommend you to pay it within a week of the bill generation date rather than waiting for the due date. This will ensure you make effective usage of your money by using your bank account money in a better and effective way.
5. Set AutoPay
In case you forget to pay the bill manually, you can keep an AutoPay date for your bill so that you do not miss out on paying the bill.
6. Reward points
You can make all the necessary payments from a credit card that you would pay through your debit card. This will help you get a Reward point which you were not getting if paid through your debit card.
7. Cashback discount
Most of the e-commerce players have tie-ups with credit card providers and give you discounts for purchasing with this card. You might have noticed Flipkart has discounts and offers with HDFC/SBI and Amazon has offered with ICICI cards. You can look for the offers going on with the website or stores where you frequently visit and can get additional discounts for your purchases.
8. Limit your usage
Don’t use credit cards up to your full limit. You can it for up to 30% of your credit limit. This will help improve your credit score and maintain your budget.
9. Don’t withdraw cash
Make sure you do not withdraw cash from ATM until it is of utmost emergency. As the interest is charged from the day you withdraw. Sometimes you are not aware and may reflect directly on your bill.
10. Improve/Build credit score
Paying your full bill on time will help improve your credit score. This will help you fetch lower interest rates for long term loans like a Home loan. Infact, if you are not using it and you are looking for a Home loan within 3-5 years, you can start using it and pay your monthly bills on time to improve your credit score.
Most of the youngsters nowadays are looking to purchase a home at a younger age. If you have not taken any loans like student loans in past, applying for a credit card can be one of the best solutions for you to build your credit score.
11. Waiver of yearly fees
Most of the card providers will get you a first-year waiver of annual fees. But they charge you from the second year, and sometimes you are not even aware of the fees for your card.
You can contact your card provider and ask them for the yearly fees and ways to waive it. Some of them will waive it if you spend a specific amount in a year say your card limit or some may waive it if you enroll in AutoPay for any one of the services with them.
12. Use it as a Budgeting tool
Once you have done all the shopping with your card, you will receive the bill on your billing date. You can analyze it and determine if you could avoid some of the expenses or if you are charged any of the fees from the ones we discussed in some of the fees associated with owning it.
13. Secure yourself from frauds
Please make sure you do not share any of your card information like card number, Expiry date, one-time password, or CVV. Also, don’t swipe your card anywhere or enter all this info on all the websites. Fraudsters are finding ways to get your card info by calling you or by cloning your card. They are improving their creativity of swindle your information. Better to be safe than regret.
14. Avoid balance transfers
In case you are not aware of what this is or how it works, I’ve explained it in detail in how it works. I would recommend you to go through what it is and how it works. You may get a call that it is 0 percentage balance transfer to your bank account but may charge you after few months or charge you in processing fees.
15. Protection program
Some of the card providers do give fraud protection. So, in case of any fraud or misuse of your card, you can try contacting your card provider and ask for protection against fraud if available.
Be a responsible credit card user and improve your finances by following these ways. If you follow these steps no one can tell you to stop it. Instead, you can ask them to use it effectively and responsibly.