Here are the smart ways to use your credit card

In India, the use of credit cards is consistently on the rise. Credit cards have become very popular due to reasons like credit limit, cashback, rewards, etc. There’s no tension about immediate payment when you want to buy something; you can buy it instantly. Whether it’s rent, expensive purchases, booking flight tickets, credit cards have countless uses. But if not used correctly, it can trap you in a cycle of debt. So, here we’ll tell you about 9 things that will help you use your credit card correctly.

1. Firstly, you should know your credit limit.

It helps you plan your expenses and your budget. Avoid maxing out your credit limit. Using most of your limit makes the bank see you as a high-risk borrower. Your high credit utilisation rate, known as CUR, will also impact your credit score. Credit utilization rate is the portion of your credit limit that you have used.

2. Another important thing is to keep track of your credit report. Your credit report contains information about your credit history. By consistently monitoring your credit report, you can keep track of your expenses. You’ll be able to identify any incorrect charges and address those. Additionally, you can also avoid exceeding your credit limit.

3. Understanding the billing cycle is also crucial. Determine the timing of your shopping. Each credit card has a specific credit billing cycle. It’s important to understand this so you can time your major purchases and take advantage of the extended interest-free period. For example, if you make expensive purchases after your card’s bill is generated, you’ll have a 45-day interest-free period.

4. The fourth important thing is to always pay your credit card bill on time. This helps maintain a good credit score and avoid any levy of late fees. payment defaults will damage your credit score and make it difficult for you to borrow in the future.

5. If you are using a credit card, you must also pay attention to its security. Use your card online or offline only at trusted places. This will help keep your credit card details safe. If the details are stolen, you could be vulnerable to cyber fraud.

6. Try to avoid making only the minimum due payment. Always pay the Last Billed Due of your credit card. This will improve your credit score. By paying only the minimum due, you might avoid penalties, but interest will continue to accumulate on the outstanding balance every day. This will increase your bill and also affect your credit score.

7. Another important thing is to avoid EMI options as much as possible. Refrain from converting your purchases into EMIs every time. EMI options come with interest, which could be higher than your expectations. So, unless you cannot afford a costly purchase and pay it off by the due date, avoid converting it into EMI.

8. Many credit cards give cashback, air miles, or discount vouchers. By using a credit card for most purchases, you can also earn more rewards. You get discounts on cinema ticket bookings, flights, or hotel bookings, so find out and use your card accordingly.

9. Lastly, never use a credit card for cash withdrawals. Heavy transaction fees are charged for this. Besides, you don’t get any interest-free period as well.

So, keep these important points in mind while you use a credit card to avoid losses.