If you know how to use your credit card properly, then it can be a valuable tool for you. Earlier credit cards were a privilege for the rich. today, a very large number of people can afford credit cards. Reasons – The card offers financial freedom and is more secure than hard cash. Credit cards allow us to purchase now and pay later. It helps in financial difficulties. If this is not enough, credit cards also come with a variety of offers and prizes that save your money and provide access to lifestyle benefits. While credit cards are beneficial, you can only get them out of your card if you use them smartly.
Do you know the smartest way to use your credit card wisely in 2020 ??, then take a look at these smart tips…….
Pay bills on time
Loss of payment attracts penalties as well as outstanding interest. So if you don’t clear your credit card balance on time, you will have to pay heavily. In addition, defaulting on your bills can hamper your credit score. Pay your bills on time to avoid overcharging and maintain your credit score. When you use your credit card regularly and pay bills on time, your credit profile with your bank improves.
This can lead to a range of additional benefits, such as an increase in spending limits and larger offers on personal loans and other financial products. Moreover, such actions will improve your credit score, which is very beneficial if your score is low.
Most credit card companies will allow you to provide a list of premature payments or schedule reminders to pay the bill. Log in to your online account and set up automatic payments to your credit card each month. If you’re not comfortable with the automated system, you should set up at least one reminder email before your payment is due so you never get late.
Pay bills in full, not minimum due
It is always a mistake to assume that the minimum payment on your card debt is sufficient. To avoid heavy interest, you must pay your bill on time.
Credit card bureaus calculate interest using your average daily balance. To find out how much interest is charged per day, take your APR (annual percentage rate) and divide it by 365.
Calculating the average daily balance is the most misunderstood concept when it comes to credit cards. Many people believe that credit card interest is calculated based on the amount remaining after payment. However, that is not the case and may lead to the payment of additional interest. Ignore the minimum payments, and make a point to clear your entire card balance each month.
Keep eyes on your account
Regularly monitor your credit card transactions to consider specific patterns of your spending. Keeping track of your expenses will also ensure that unexpected transactions come to your attention and you can point them out to your bank right away. You can also set your credit card limit to avoid any additional costs.
Most credit card companies have sophisticated systems that investigate fraudulent charges, but they will not be able to catch all fraud charges. At least once a month, you should check your statement and verify it.
Monitoring your statement helps you investigate fraud, stay on a budget, and maintain a low balance. Even if you have set up automatic payments, it is wise to sign in every month and check your statement to make sure it looks like every month.
Know your card limit
Credit cards give the user the freedom to spend. However, if you use most of the available credit limits, your credit score will be hit. High credit consumption defines a user as credit hungry with a high probability of default. This adversely affects your credit score and makes it difficult for you to access additional credit features.
If you are worried that you may be overpaying, ask your credit card company to lower your credit limit to something you know you can manage on a monthly basis. They should be more than happy to place an order because they want to eventually refund you, and they can often make a change in credit limit effective immediately.
Another thing you should try using your card until you pass the self-imposed limit, and put your card in the drawer until the beginning of next month – or until you pay your bill in full. This can help you stay on top of the budget and on top of the bill by maintaining a large credit limit that can be useful in an emergency.
Be discreet about using credit cards. Avoid raising your credit limit every month.
Observe your billing cycle
In addition to paying your credit card bill on time, check itemized bills carefully. Understand what charges are mentioned in your bill before you pay your dues.
Each month your credit company will issue a statement with two dates: expiration date and payment date. This is the last day you can charge for a statement. After the deadline, any new transactions will proceed in next month’s statement. The payment date lets you state a detailed statement when payment is due.
Keep in mind that all credit cards are different and each has its own billing cycle, payment date, and grace period. Review your credit card before use, to understand how it works.
Charge as much as you can afford
Don’t look at your credit card as an extension of your budget. Never take more credit cards than you can currently cover your bank account. By simply spending on what you can afford, you can be sure that you will not pay any interest and will always maintain a high credit score. There is a temptation to spend knowing you will be paid, but it is a bad deal. If you lose your job or take part in an emergency, you will not be able to cover those costs. This is how people start sinking into debt, and it slowly builds up from there. It is recommended that you do not currently charge more than cash.
You can do this by prepaying a fixed amount to your principal each year. This you have to do over and over your EMI payments. Plan your expenses throughout the year and make fixed savings each year. Spend these savings on prepayments to reduce the principal.
If your financial situation has improved a lot or if you have been able to collect a large amount, you can repay your loan in full before your term. You may have to pay a penalty for the full prepayment of the EMI.
Full utilizing rewards
A credit card rewards you for a specific type of expense. Some high-end cards come with guaranteed gift vouchers and benefits, such as free admission to the airport lounge. some rewards also give you benefits for joining fees and other periodic benefits.
In addition, your accumulated points can be redeemed for cash or a kind reward. Use your card in a way that gives you the rewards and benefits you deserve. Read your credit card booklet carefully, especially the details about the benefits and rewards program offered by it.
Card companies encourage you to spend more by giving you reward points for each expense. When it sounds amazing, don’t just spend to get points. Also, don’t wait any longer for points to accumulate.
Use card at trusted merchants
Whether you are shopping online or at a local store, make sure the merchant or retailer is an establishment you trust. This will reduce the risk of your card being misused. When you do shopping online or transaction, fraudsters will redirect you to fake websites that look exactly like the original website, and then even if you can make your transaction and transaction using a credit/debit card, your details Will be stolen. So make sure your merchants are safe when you use your card.
Use your card on a big purchase
The best way to do this is to save cash for your purchase first. Then, you make a big purchase with your rewards credit card (and excluding prize points), you will have the funds to pay it right away.
Use your card for a large, important purchase, then pay for it within a few months under strict time limits – knowing that you will pay a small interest for the luxury of spreading the payment. (Unless you take advantage of the initial 0% APR offer fur.)
It can also be helpful not to use your card on other purchases until you have paid the full payment.
If max required then take a loan
Credit card companies allow you to take a personal loan based on your payment history and Credit score. If you need financial help, don’t look for a loan anywhere else. Use your credit card to get one.
Credit cards are required in many ways. Who has to keep cash when the card can be changed? Credit cards score on debit cards because of the ease of dealing even in reward points and financial crises. Take the time to understand your card’s fee structure, interest rates, penalties, and reward structure. Finally, before you sign up for that card application, make sure you have found the online card markets to compare and determine the best card for you and your lifestyle.
Focus on join fees and annual fees
Credit cards often have joining and renewal fees. However, there are cards that have no fees. When looking for a card, pay attention to the format of the fee. The fee should be reasonable and exceed the benefit of the card. Moreover, many cards can turn a fee if you spend a certain amount annually. See these opposite benefits to save annual fees.
Keep secure your card details
Scammers keep finding new ways to deceive credit card users. One should educate oneself and become aware of new dangers. Do not store your credit card number, password, PIN, or other data on the smartphone. It is very easy for card fraudsters to steal data and commit fraud. Always know when your card is handed out. Be careful not to swipe your card anywhere except POS machines and ATMs. Unsecured swipes can clone and misuse your card.
Apply for another card if needed
Many brands want to entice you to sign up for their co-branded cards. For any co-branded card to be useful, your consumption of that particular brand must be very high. Such is the composition of their reward. You should carefully check the rewards before signing up for such cards. If a card helps you in your lifestyle, you should choose it.
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