The year is still fresh and air crisp; the perfect time to get some Credit Card tips for a strong financial year ahead.
The year is still fresh and air crisp; the perfect time to get some Credit Card tips for a strong financial year ahead. A Credit Card isn’t just another means to spend money. It is a tool, which if used wisely, can help boost the purchasing power of your money.
Our understanding of Credit Cards has only gotten better with each passing year, more so after demonetisation when people started relying on their cards more than ever before. Here are some tips we learned in 2017 that’ll definitely help us in the year ahead.
-
Be A Good Borrower
That tiny minimum amount due figure on your Credit Card statement is so appealing. If only life was that good. But you clearly blew it out of proportion as evidenced by your total outstanding amount. Repaying a big Credit Card bill might seem difficult, but you should go ahead with it if you can.
Paying just the minimum amount due will attract interest on the outstanding amount. In the long run, paying just the minimum amount due could end up costing you quite a bit. And if you miss payments or make late payments, your Credit Score will take a beating.
If you are a spendthrift, we suggest that you cap your Credit Card limit to a neat, affordable sum. Once you get into the habit of repaying your bills in full and on time, you can ask the bank to up this limit.
Additional Reading: Credit Card Trends To Watch Out For In 2018
-
Consider Balance Transfer
You might have raked up huge Credit Card debt due to an unforeseen emergency. If you want to be relieved of this burden quickly, you must vow to deal with your finances smartly and strategically. The first step, of course, is to tighten you purse strings. The less you spend, the more money you’ll have to pay off your Credit Card bill.
The second step is to opt for a Credit Card balance transfer. Balance Transfer is the process by which the outstanding amount on one Credit Card is moved to another card issuer. This is usually done to reduce the interest charges on debt accrued on a card by the cardholder. Some banks offer a balance-transfer facility at an attractive interest rate of 0% APR (Annual Percentage Rate).
Keep in mind that these rates are promotional and you must repay your debt within the offer period. Once the promotional period is over, the interest rate on it will bounce back to the regular rates and in some cases, it might be even higher.
Additional Reading: How To Close A Credit Card Account
-
Do Your Research
Do your research before applying for a Credit Card. Always compare the options available in the market before you zero in on ‘the one’. It isn’t necessary that a Credit Card that works for your friend will work for you too. You might have different lifestyle needs from your close buddies.
What does undertaking Credit Card research mean? It means evaluating your needs, salary and financial situation before picking a card. A Credit Card should complement your lifestyle. For example, a Travel Card will serve a globetrotter nicely, while a Shopping and Cashback Credit Card will help frequent shoppers! Also look up the various Credit Card charges and fees before you click on apply.
Here is one more step. Check your documents before submitting your Credit Card application. Also, check your Credit Score. A good score is amazing, but if your score is average or in the red, then beef it up before applying for a Credit Card. A poor Credit Score is a strong reason for banks to reject your application. A rejected application will further hurt your Credit Score. Be careful and be prepared before taking the Credit Card plunge.
Additional Reading: Tips To Improve Your Credit Score
-
Good Credit Card Habits = Good Credit Score
A Credit Card is one of the best ways to build a Credit Score. Just getting a card won’t be enough. Use it wisely. Applying for a Credit Card and not using it at all is not good for your Credit Score either. Make sure that you spend no more than 30 percent of the total credit available to you. Maxing out your Credit Card every month is not good financial behaviour.
Once you have mastered the art of handling one Credit Card, you can go for a second one for additional benefits. Let’s say you have a Rewards Credit Card. You can now go for a Lifestyle Credit Card and get benefits on all those weekend dinners and other tiny luxuries of life. Moreover, managing two Credit Cards works magic for your Credit Score. It tells lenders that you can juggle and manage your finances well.
-
Direct Debit
You might be excellent at using your Credit Card but perhaps you are a little forgetful. Though you spend wisely, you always forget to pay your bills on time. The solution is to opt for direct debit. All you need to do is set up auto-debit instructions on a Savings Account of your choice and your Credit Card bill will be taken care of automatically. Hence, you don’t need to worry about paying your bill every month. Let technology do the hard work for you.
-
Get EMI Friendly
Are you looking to buy the latest iPhone? Spending big money in one shot is going to burn a big hole in your pocket. So, what are your options? Make the purchase using your Credit Card and break up the fat sum into tiny, edible EMIs. The ones you can easily digest every month. Without a Credit Card, you’d have to apply for a loan and go through the entire process. With a Credit Card, you can purchase big-ticket items in one swipe and then break up the sum into EMIs by accessing your net banking account or calling up the customer care service of your bank. A simple process!
Buying things on EMI is good for your finances. Repaying your EMIs on time helps your Credit Score. Moreover, paying in EMIs for goods and items you need helps you maintain liquidity. This will save you the pain of experiencing a cash crunch. After all, you need money to pay for your daily expenses and make your investments.
Additional Reading: 11 Things You Can Save Money On Every Month
-
Keep Checking Your Reward Points
We love collecting reward points on our Credit Cards. Imagine one fine day you wake up to find your rewards kitty empty. Nothing there. Zero. Zilch! Put your head under your pillow and cry. This is because reward points are not immortal. If you do not use them within a certain period of time they die. In some cases, you can even use points earned to repay a part of your Credit Card bill. This privilege is especially beneficial when you wake up to huge Credit Card bills after a wild, wild night.
These are simple points to remember and will help you be in control of your Credit Card. For those looking to jump on the Credit Card bandwagon, we have a host of offerings for you. Check them out!