Your wedding vows were the highlight of the ceremony and you promised to live by them forever. Unfortunately, getting a credit card is a relationship that requires you to take some vows too.
Here’s a list of vows one should take for a happy credit card relationship.
If managed well, you may easily get the best out of your credit card.
Choose a card based on your lifestyle
Are you a frequent flyer? Or do you love to dine out often? There are frequent flyer credit cards that can give you an edge. There are a number of cards that give you extra points or rewards if the cards are linked to a specific service, product or company.
The fuel credit cards come with savings on fuel purchases and are apt for those who go for frequent long drives. With each fuel up using the card, extra points are gained and can be redeemed later, or used for waiving the surcharge.
A frequent flyer card holder can also avail similar benefits, such as earning free miles, discounts on car rentals, hotel booking etc.
The dining-specific credit cards will help you relish dishes at your favourite restaurant at a discounted rate up to 10%.
Making the best use of reward points
Cashing in on the reward points is the best part. Keeping a track of your bonus points is equally important.
Whenever a credit card is swiped, you earn extra points. On a rough estimate, two to four points could be gained with a purchase of Rs 100. The points will accumulate with each purchase. The value of each point varies from card to card and will be between 50 paisa to Rs 1. Once the points are accumulated, try to find out where and on what the points could be redeemed.
Read the credit card company’s catalogue to redeem the points on buying clothes, electronic gadgets or jewellery. A free meal, a free air ticket or huge discounts on purchases are possible for frequent credit card users.
Also, make note of the time limit within which the extra points should be encashed.
Choose cards with lowest charges
While scouting for a credit card, make sure that you go for the plastic money with the lowest charge.
Some of the charges that top the list are interest, annual fees and penalty fees. Interest comes into play when there is a default in credit card payment or only a minimum amount has been paid. Make a comparative study of available credit cards and choose one with the lowest interest. You should know how to make the best use of the interest free period on credit cards.
Most of the banks will waive the processing fees, but annual fees will be waived only when there is enough activity on the card. If the card is used sparingly, chances of attracting annual fees are much higher.
Never go for cash advances against cards
Consider this, you can avail a personal loan at around 14 to 16% interest and the interest for cash advances against credit cards is close to 24%. The second option is a big jump.
That’s why it is better not to take cash advances against cards as they come at a hefty cost.
There is no grace period for these advances. Interest will be charged from the day you withdraw money from an ATM. Moreover, most banks may a charge a cash advance fee that can weigh you down. The cash advance option should be used only in emergency situations where all other avenues to raise funds failed.
Additional read: 5 Credit Card Tips for Your Peace of Mind
Say no to too many cards
It may seem like a good idea to have a number of credit cards in your wallet, but they can cause you into trouble.
More credit cards pave way for more debt. If you are not able to curb your spending spree through credit cards, you may not be able to pay back any of the amounts on time.
If you have only one card, it is pretty easy to track the spending pattern. The number of cards can go up to two or three; beyond that may invite trouble. Try to fine tune your needs and increase the number of cards accordingly.
Avoid unwanted add-on cards
Supplementary or add-on cards can also break you. These cards are issued over and above your primary card for your family members, such as parents, sons or daughters.
The point to be noted here is that when it comes to paying the dues the onus is on the primary card holder. So, if the card is in hands of someone who doesn’t know how to use it judiciously, it can pose numerous problems.
You will be liable for late payment charges and also interest on outstanding amounts. It is always better to avoid unwanted supplementary cards.
Credit cards have umpteen benefits but, they have a darker side too. Just like your marriage. Of course we’re kidding.
Additional read: 5 Golden tips to manage your credit card better