Credit cards are not always harmful to one’s financial stability but it majorly depends as to how it has been utilized. Apart from the list of benefits it offers under various packages and schemes, many a times customers have been affected enormously when they had to pay their bills due to the hidden charges, processing fees, overdue charges etc.
If however, you utilize this plastic cash effectively, such charges may not affect you much giving you the opportunity to make the most of it. Here are some of the ways by which you can ensure a smooth
utilization of your credit card:
Choose your card wisely:
Banks and other credit card companies have managed to come up with brand new packages and schemes in these trying financial times to lure customers into their credit trap. However being a prudent customer, it is your duty to ensure that you pick a card that best suits your needs. This can be done by first analyzing what are your credit requirements, up to what extent can your requirements climb up to and then choose the card that closely matches all such needs and not get tempted for those that provide any service for free.
Understand the features:
It is important for you to understand the features of your card as much as possible. If not all, may be
knowing the terms as to withdrawing funds, utilizing it for purchases, online transactions etc. For example, if your credit card provides you with the benefit of reward points each time you fill petrol, then there is absolutely no point in paying cash for such purposes. Instead, pursuing the pursuit of utilizing such an opportunity and collecting as many reward points as possible in order to avail free petrol refuel later, is what is advised.
Similarly, if you are being charged for withdrawing cash from the ATMs of other banks, then withdrawing from cash from your own bank’s ATM is what is advised.
Use your card judiciously:
Utilizing co-branded credit cards gives you the opportunity of bagging great deals and discounts since
most cards have tie ups with shopping stores. You can avail these benefits too and reduce the cost on your overall purchases as it requires you to pay a lesser amount as the interest rate will be charged on a comparatively lesser amount.
Cash Back rewards:
Most credit card providers provide their customers with the advantage of cash back of 3-5% on their
purchases. But that card will be apt for you that will deduct such purchases right from the next credit card statement or the one that provides you higher cash back. However it is important to remember that, a cash back offer will only help those individuals who spend a lot from their credit card otherwise the average percentage ratio may tend to increase on your lowered purchasing amount, converting it into an expense. Therefore make sure that you know the lowest limit on which you will be provided cash back and choose accordingly.
Provision of Other benefits:
Generally, credit cards offer you complimentary benefits like accident insurance, baggage insurance,
access to exclusive travel lounges at the airports etc. Try to opt for that card that provides such opportunities wherein you can bag most of its advantages.
Utility bill payments:
Most credit card companies offer you the advantage of collecting reward points on any of the utility bill
payments that you make. Bills like electricity bill, dish connection bill, insurance premiums, telephone bills etc can be paid using your credit card. Doing so, you can get lucky and bag the opportunity to win a trip to your favorite holiday destination or win a laptop etc. depending upon the reward schemes announced by banks and other credit card issuing companies.
Consolidate your spending:
In order to accumulate more points quickly, make sure you make most of the purchases using only one card. This will give you the chance to avail those points sooner to purchase or avail the bounty you always wanted.
Pay your bill in full:
This is one of the most important clauses. People usually ignore its importance and take the concept of rolling credit very lightly and expect it to be very simple, which in reality, is not the case. In order to avoid any burden on your finances which can disintegrate your hope of availing further credit, for example, to build your dream home by using a home loan or for purchasing your dream car by availing a car loan etc, make sure that you have a strong financial statement which is possible only, when other things remaining the same, your credit card bills are paid on time.