When used prudently, your 86×54 mm magic box (credit card) can do wonders for you. Fully loaded with rewards, credit card as a financial product, has turned out as personal favorite for many. You can draw maximum benefit from rewards program, if you use your credit card the right way. With the rising competition in credit card industry, the card issuers are providing numerous offers to their customers to grab bigger share of the pie. The Credit card reward program offers cash back, travel offers, reward points, credit card deals and many more. All these offers are worth it when you are well-versed with do’s and don’ts for your credit cards. Following are some of the ways that assist you to get maximum out of your credit card:
Following things you should do:
Keep track of your transactions: You should always monitor your transactions through mobile/ e-mail alerts. Whenever you get a mobile alert, make sure you read the complete message from credit card provider. Along with this, make it a practice to read and verify your monthly credit card statement. If you find difficult to remember all your purchases, then it is better to save all the receipts and compare it with your credit card statement each month. Whenever you notice any unauthorized transaction, make sure you call up customer care and inform them about the transaction immediately.
Check your credit profile once in a year: Your credit card providers always share details of your repayment with several credit agencies like CIBIL TransUnion, Equifax etc. who in turn rate you on a credit score ranging from 300-900. It is a good practice to buy your credit score and complete report, at least once in a year to keep track of your credit history. Your credit score tells the lender how likely you are to pay back loan or credit card dues based on your past repayment behaviour. The higher your score, the more the chance of your loan application getting approved! If you know your credit score, you can always work towards improving it over a period of time. And if you find any error in your report, you can always dispute it with the agency and take it up with concerned lender to rectify it.
Remember your credit card number: Using only one credit card provides maximum benefit in terms of reward points and ease in handling. It is always advisable to remember your credit card number so that even if you miss your credit card somewhere, you can immediately report it to the customer care. Remembering your credit card number also simplifies the process during online shopping as you need not always take out your card and copy its number each time you shop.
Understand your credit card charges: Before you sign up for a credit card, it is very important to know all the charges that are associated with that card. Usually, the credit card companies charge for: Joining & Annual Fees, Late payment (late fee and interest), Cash Advance fee, Over Credit Limit charge, Cheque/ECS Bounce Charge, Petrol Transaction Charge, Statement Request (beyond 3 months), Foreign Currency Transaction etc. It is advisable to read and understand the schedule of charges along with the “Terms and Conditions” of the credit card beforehand to avoid any disconnect later.
Keep yourself updated on misuse of credit card: While using a credit card, you should always be informed on the risks and frauds that can happen and the ways to prevent them. The best way is to read all the e-mailers/ letters sent by your credit card providers as they always keep their customers informed on any new precautionary measures and ways to protect your credit card. Also, read more on my article “10 smart ways to avoid credit card frauds” to keep yourself informed about various credit card frauds and ways to can avoid it.
Following things you should not do:
Don’t miss your credit card payment: There is always a cost associated with the benefits that you enjoy. The credit card companies, who lend you money for an interest free period of around 45 days and also provide you rewards for your purchases, ought to charge a fee ranging from 22-45% p.a if you fail to make the timely payment. If you want to enjoy these free benefits, then you should promptly repay your credit card dues each month i.e. by inculcating self-discipline, you can avoid these charges on your card.
Never pay only minimum: Paying only the minimum due amount might not classify you as a defaulter but may cost you an interest on the funds borrowed by you. You should always try to repay your complete credit card bill each month to avoid high charges. However, there may be months when due to some unexpected expenses, you might not be able to repay the credit card balance in full. Then only during those months, you should make at least the minimum payment and don’t increase your credit card balance by more purchases. If you know you don’t have the money to pay your credit card balance, then avoid using it until you can afford to pay new charges again.
Do not fully utilize your credit limit: Your credit score might get affected if you fully exhaust your credit limit and if you exceed your sanctioned credit card limit, then you may have to pay charges to your credit card provider. It is always advisable to use up to 50% of the credit limit sanctioned to avoid any negative impact on your credit limit.
Never share your credit card information: You should never share your credit card details, especially the password and PIN, with anyone (not even the customer care executive). Always ensure to enter or key-in your IPIN over the conversation with customer care and do not spell it out as this can lead to sharing of sensitive information over the phone with a third party.
Never trust all websites: While you use your credit card online, always ensure to check the valid source and authenticate the genuinely of the website where you use your credit card. Always shop from the reputed websites and never trust the public computer or Wi-Fi as this might hack your credit card details.
By taking some precautionary measures, you can safely use and enjoy the benefits of a credit card. You just need to be a little careful while you use a credit card and by doing this, you can become one of the delighted credit card customers.