A credit card, if used smartly, offers extensive financial benefits to the cardholder. You can also save substantial amounts of money by using your credit card to carry out your financial transactions and then paying the dues on time. Following the tips listed below would help you in having a highly desirable experience of using credit cards.
Pay dues on time: The importance of timely repayments of credit card debts cannot be overstated. Taking cognizance of the fact that the interest rates on credit cards can be up to 42%-45% would be enough to convince you to pay the entire outstanding balance by the due date.
Another attraction of paying the dues in full is the interest-free period of up to 50-55 days (depending on the card) that you get on the card transactions.
Smart use of reward points: Don’t make the mistake of assuming that reward points earned on credit cards serve no significant purpose. Use the accrued points judiciously to redeem them for travel bookings, shopping, and credit card bill settlement and you would soon realize the amount of money that they save for you.
Go for a low-interest card: When you decide to apply for a credit card, do a thorough research of the options that are available in the market and select the card that’s best for you. Don’t skip checking the interest rates and the other associated fees and charges of the card.
If you are hard pressed for cash at the end of the month, it’s wise to go for a card with a low rate of interest even if it means a low number of reward points on its transactions.
Avoid mindless spending: You need to assert it to yourself that by refraining from impulse purchases, you are saving yourself from future financial hassles. Reckless use of credit cards is perhaps the most common cause of incurring huge debts on them.
Staying away from cash advances: You also have to fight the temptation of withdrawing cash from ATMs using your credit card. This is because of the fact that credit card cash advances are associated with an interest rate that can be as high as 42% – 44%.
What makes it worse is that the interest starts accumulating from the date of cash withdrawal itself. The luxury of the grace period is not available on credit card cash advances.
Use the convenience of balance transfer: Do you have more than one credit card? And if you do, are those cards issued by different banks? If yes then you can transfer the outstanding balance from one card to the other.
It would be particularly helpful if the balance is transferred from a card with a high-interest rate to a one that has a low-interest rate. The debts incurred on the card on which the balance has been transferred can be paid in due course.
Use EMI facility for big-ticket purchases: One of the popular attractions of credit cards is that they offer the facility of EMI for high-value purchases (above Rs.2,500 – Rs.5,000). So, by availing this facility, you do not have to pay the entire purchase amount at once at the end of the billing cycle.
Avail the benefits of online shopping: Today, almost every large and small online shopping platforms launch attractive deals and discounts on a multitude of products that can be availed by using a credit card (sometimes only specific bank cards).
These deals include offers like cashback, accelerated reward points, additional discounts, exchange price, and many more. By opting for these online stores to purchase the stuff that you need, you can save an impressive amount of money.
Be extremely careful during foreign trips: Most credit cards come with a high foreign transaction fee which is usually some percentage of the transaction amount. So if you frequently indulge in foreign trips, these extra charges can add up quickly.
Therefore, try to find a card that that waives the foreign transaction charges on all foreign transactions.
Save money while travelling: If you are a frequent traveller, a travel credit card would be the best to save money on travel ticket bookings and hotel reservations. However, even if you don’t have a travel card, check out the internet for the latest travel offers that can be availed with your card.
Also, during booking a hotel room, check with the reception executives about any deals and discounts that you can enjoy with your card.
Last word: If you use the credit card responsibly, you can certainly save your money on almost every type of transactions. All you need to do is take care of points like payment of the dues, financial discipline, and the other tips listed here. This would ensure a wonderful and rewarding credit card experience for you.