Over the past few years there has been a drastic change in the spending habits across the earning class. With a stable source of income and various options for payments credit cards have become the best options to meet short term financial requirements.
A credit card can be a boon or a liability but it depends on how the card holder is using it. Using credit cards wisely can help cardholders avoid falling into debt traps.
To avoid this, we have a list of practical tips that will help you to use credit cards wisely.
(1.) Choose the Right Card
It is very important to choose the right card that aligns perfectly with your financial needs and spending habits. Start comparing different types of credit cards based on their terms and conditions, annual fees, interest and reward points they offer.
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(2.) Research On the Billing Cycle
Once you get the credit card, familiarize yourself with the card billing cycle. Usually the billing cycle of the credit cards ranges between 25-45 days or longer depending on the type of credit card issued to the card holder.
(3.) Set Up your Spending Limit
Usually a credit card comes with a higher spending limit but it is important to set your spending limit as per your budget and capability to pay back. Keeping your expenses below the spending limit can help you to maintain a good credit score.
(4.) Pay bills before the Due Date
It is very important to pay your credit card bills on time. By doing so it will lead to extended benefits such as an increase in spending limit, as well as it will offer loans and other financial products. Paying your bills on time will help you to improve your credit card score.
(5.) Avoid Cash Withdrawals
Do not withdraw cash from the credit card. There are higher interest rates and charges on cash withdrawal, moreover interest starts accruing on cash withdrawal rather than at the end of billing cycle.
(6.) Set Alerts and Autopay Options
Missing a payment can lead to heavy penalties, to solve this problem you can set alerts and integrate autopay options which can help you to avoid extra charges and maintain your credit score.
(7.) Take advantage of the Rewards Points
If you own a cashback or shopping rewards credit cards it is important to redeem your reward points every time you get after spending a particular amount.
(8.) Block your Card in Case of Theft
Block your card immediately in case of theft or if you have lost your card. Deactivate your card immediately online to avoid any misuse or financial frauds.
(9.) Opt for Credit Card Protection Plans (CPP)
Opt for Credit card protection plans. It acts like an insurance to safeguard you from any financial loss or frauds. Integrating CPP will ensure all round protection of your card.
The Final Thoughts
The users must remember that a credit card is not a free money offered by banks and other financial institutions. By following the tips mentioned above the individuals can use their credit cards wisely as a financial tool and maintain a good credit score.
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