With the right credit card, you can not only save but also earn great benefits on your transactions. However, it is important to apply for a credit card that suits your lifestyle to make the most out of it. Also, using a credit card responsibly is as important as choosing the right one. Credit cards can also put your finances at risk, if used recklessly. Here are some tips that can help you use your credit cards to the fullest and maximize your savings:
Choose the right credit card
It is important to choose a credit card wisely to enhance your benefits. You should always analyze your requirements and spending pattern before applying for a credit card. Always apply for a card that suits your requirements the best. For instance; if you frequently shop online on brands like Amazon, Flipkart, Myntra, etc., then choosing a card that offers exclusive benefits on online shopping would be best for you.
Pay off your balance on time and in full
Along with great benefits, credit cards come with high interest charges for late payments. Your payment history has the highest impact on your credit score. Therefore, it is important to pay your bills on time to save yourself from high interest charges and a consequent drop in your credit score. Credit cards also give you the option to pay the Minimum Amount Due (MAD) and roll over the outstanding balance to the next billing cycle. However, in such cases, remaining outstanding balance as well as your future transactions will start attracting interest charges. Hence, it is important to pay your bills in full and on time to save yourself from high penalties.
Manage your reward points smartly
Credit cards let you earn reward points for your transactions. Mostly, reward points come with an expiry date, after which they become null and you cannot redeem them. Within the validity period, you can redeem the reward points against numerous options like hotel bookings, shopping, e-vouchers, products from the rewards catalogue, claim merchandise and much more. You should redeem your reward points as per your requirements within the given period in order to enhance your savings. Also, some redemption options may give you a higher value-back than others. Hence, you should also consider which option to choose so that you can get the most value out of the accumulated points.
Also Read: How Should You Make Use of Your Rewards Credit Card Wisely?
Do not max out your limit
When you get a credit card, the issuer assigns you a credit limit which is the maximum amount that you can spend using your card. However, it is advised not to use up the entire credit limit available to you. It is important to keep your Credit Utilization Ratio (CUR) as low as possible as a higher CUR can negatively impact your credit score. The Credit Utilization Ratio (CUR) is the ratio of the credit limit utilized by you to the total credit limit. A higher CUR represents that you are credit hungry and in a need of credit. Therefore, it is important to maintain a good CUR in order to make the most out of your credit card without affecting your credit score.
Consider credit card balance transfer
If you have multiple credit cards and you are struggling to pay off your debt, then you can opt for a balance transfer. You can also opt for a balance transfer if you find another credit card with better benefits and a lower interest rate. This way, you can pay off your debt conveniently and avail better benefits. If you do not want to opt for a balance transfer, then you can consider applying for a personal loan to pay off your debt as it is offered at a lower interest rate compared to credit cards.
There is no doubt that credit cards are a great financial tool. You can maximize your benefits by using them efficiently. Credit cards not only offer benefits but can also help you earn attractive rewards on your transactions. You can use the above-mentioned tips and make the most out of your credit card.
Founder Dinis Guarda
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