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10 tips to use your credit card smartly

Though credit cards are rewarding, you can get the maximum out of your card only if you use it smartly.

November 10, 2018 / 02:58 PM IST

Adhil Shetty

We love credit cards. While earlier credit cards were the privilege of the affluent few, today, a very large number of people can afford a credit card. The reasons – the card provides financial freedom and is more secure than hard cash. Credit cards let you to buy now and pay later. It thus help in a financial crunch. If this is not enough, credit cards also come bundled with various offers and rewards which save you money and provide access to lifestyle benefits.

Though credit cards are rewarding, you can get the maximum out of your card only if you use it smartly. Do you know how to use your card smartly? Here are 10 ways which would tell you how:

Ask for high credit limit

The allowed credit limit for each individual is different. If you are opting for a new credit card, ask for the highest available credit limit. Besides allowing you a higher limit on credit transactions, a high credit limit also improves your credit score. This is since low use on a high spending limit implies a lack of credit-hungriness on your part, which contributes usefully to your credit history.

What Are Credit Scores And How Do They Work?

Take time to understand rewards

Credit cards give you reward points for specific kinds of spending. Some high-end cards also come with guaranteed gift vouchers and benefits, such as free access to airport lounges. Some gifts may also be provided as joining benefits, others as periodic benefits. Additionally, your accumulated points can be redeemed for rewards in cash or kind. Use your card in a manner that helps you get the best out of the rewards and benefits you are eligible for.

Pay your credit card bills on time

This is well-known, yet many ignore this advice—with dire consequences. Credit cards impose a very high interest rate on outstanding balances. So if you do not clear your credit card dues on time, you would have to pay heavily. Moreover, defaulting on your bills also hampers your credit score. To avoid additional interest outgo and to maintain your credit score, pay your bills on time.

Don’t settle for minimum payment

It’s often mistakenly believed that making the minimum payment on your card dues is sufficient. To avoid penalties, you must pay your bill on time. But to avoid heavy interest rates, you must also pay the bill in full. Don’t pay attention to the minimum dues, and make it a point to clear your full card balance every month.

Avoid using your card at an ATM

Credit cards also let you withdraw cash from ATMs. Avoid using this facility. Though allowed, ATM withdrawals attract heavy charges. You wouldn’t want to pay that, would you?

Ask yourself if you need that co-branded card

Many brands like to tempt you into signing up for their co-branded card. For any co-branded card to be useful, your consumption of that particular brand needs to be very high. Such is their reward structure. You should examine the rewards carefully before signing up for such cards. If a card helps you in your lifestyle, you should opt for it.

Keep your credit card details secured

Scammers keep finding new ways to defraud credit card users. One must educate oneself and be aware of new threats. As a basic measure, always keep security details such as security pin, CVV number, OTP, and expiry date private and secure. When handing over your card, always know where it is. Careful not to swipe your card in any place except POS machines and ATMs. An unsecure swipe could lead to your card being cloned and misused.

Pay attention to the joining and renewal fees

Credit cards often have joining and renewal fees. However, there are cards which have no fee. When looking for a card, pay attention to the fee structure. The fee should be reasonable and should be outweighed by the card’s benefits. Moreover, many cards allow a fee reversal if you spend a certain amount annually. Look out for this reversal benefit to save on the annual fees.

Scrutinise your credit card bill

Besides paying your credit card bill on time, scrutinize the itemized bill carefully. Understand which charges are mentioned in your bill before clearing your dues.

Avail a loan if required

Credit cards also allow unsecured personal loans based on your credit history. If you require financial help, don’t look for loans elsewhere. Use your credit card to avail one.

Credit cards are a necessity in many ways. Who wants to carry cash when a card can replace it? Credit cards score over debit cards because of the reward points and the ease of conducting transactions even in a financial crunch. Take time to understand your card’s fee structure, interest rates, penalties, and reward structure. Lastly, before you sign on that card application, make sure you’ve combed online card marketplaces to compare and determine the best card for you and your lifestyle.

The writer is CEO,

first published: Sep 4, 2017 12:29 pm