You have just got your credit card in your hand and that shiny plastic piece seems like a magic wand to you, but be careful! This is not a magic wand, but a double-edged sword. When used properly, it can make your financial life easier, provide rewards, cashback, strengthen credit score and can come in handy in emergencies. But a little carelessness and you will get stuck in the maze, where interest rates ranging from 3-3.5% per month (ie 36-42% per annum), late fees, penalties and huge loss of credit score can haunt you for years. Especially for first-time credit card users, this initial phase is the most dangerous and most important. The bank gives you a low limit, but keeps an eye on your every move. So adopt some basic but game-changing rules now, so that you can reap the benefits of credit cards and not fall into their trap.
How to use credit card properly?
The most important thing is to pay the bill on time and in full.
Always try to pay the credit card bill in full before the due date. This not only keeps your credit score better but also prevents you from paying heavy interest. If for some reason full payment is not possible, then at least pay more than the minimum amount so that the interest burden can be reduced.
Converting big expenses into EMI can be beneficial
By choosing to convert large credit card purchases into EMIs, you can divide your expenses into easy installments. This reduces the pressure of a lump sum payment and is sometimes cheaper than normal credit card interest.
Avoid withdrawing cash
Withdrawal of cash from credit card is considered to be one of the most expensive options. Interest starts accruing on cash advance as soon as the money is withdrawn and there is no interest-free period. Additionally, additional fees also have to be paid. Therefore, use this feature only in emergency situations.
Keep a constant eye on your expenses
To keep your credit card expenses under control, regularly check your statements and SMS or e-mail alerts from the bank. With this, complete information about your expenses is maintained. Apart from this, it is also important to check the credit report from time to time, so that any mistake or error can be caught in time.
Don’t apply for multiple credit cards at once
Applying for multiple credit cards repeatedly or simultaneously can have a negative impact on your credit score as it increases hard inquiries. It is better to choose the right card according to your needs and spending habits.
Stay informed about rewards and benefits
The reward points, cashback and other offers available on every credit card are different. If you know about them and use them properly, they can increase your savings.
Use your card only at trusted locations
To avoid credit card fraud, always make payments only at trusted shops, websites and merchants. This reduces the risk of misuse of the card to a great extent. Using credit cards wisely not only makes your everyday expenses easier, but also puts you in a stronger position for loans and other financial needs in the future.
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