We all have credit cards, but we are always amazed that what’s the best possible way to use credit cards wisely. Moreover, we often need clarification because there is no such specification for the credit cards wisely used. However, as times are changing and people are more encouraged to do cashless transactions now, we should learn to use credit cards wisely. In this article, we will provide you with information about the question of 10 tips on how to use credit cards wisely. Along with credit cards wisely used, we’ll also briefly describe how you can improve your credit card score.
10 Effective Tips to Use Credit Cards Wisely
Credit cards wisely to get benefits is an art, and many people need to be made aware of the use of their credit cards wisely. They use it to submit and withdraw money. However, with these tips, you can use your credit card wisely and make the best use of your credit card. Some of the recommendations for credit cards wisely use are :
1. Pay off the High-interest Credit Card First
If you are holding more than one card and each card has unpaid balances, you should pay first for the card which charges the highest rate. It is the correct way to credit cards wisely use. High interest is a bad debt you must eliminate as soon as possible. However, it would help if you had a proper plan with an appropriate time frame. First, you should list all your debt, pay the high-interest rate, and then go towards the lower one.
2. Pay your Bill Before the Due Date
If you’re planning to buy something with the help of your credit card, first, you need to prepare a proper repayment plan. Paying your credit card bill before the due date will be beneficial. Also, it is an effective way to use credit cards wisely.
However, this process will help you make a good profile with the lender and improve your credit score. There a different types of banks. Some banks offer you the option of paying back your credit card bill through installment, and some banks want a lump sum. Which bank would you like to choose according to your convenience?
3. Use Your Credit Card at Trusted Merchants
Everyone should be aware of the increasing number of credit card frauds. So it is essential to everyone that you can practice using a credit card only at trusted merchants. Also, they will teach you about every pros and cons of credit cards and tell you how to use them.
4. Spend in Line with the Budget
Making your monthly yearly, and daily budget is the best method to avoid accessing money. However, you should use a credit card to be something other than an empty-pocket person. People who use credit cards often forget about the debt they have created because of access to shopping.
So it becomes essential that you know how to use credit cards wisely because excess use of credit cards can put you in a debt trap. Also, it would be best if you stopped over-accessing your money on big purchases through card EMIs
5. Take the Necessary Security Measures
We all know that there is a gradual increase in the use of digital banking channels, plastic cards, etc., which results in the chance of fraud. So it becomes necessary to know how to use credit cards wisely and what precautions you should take while using the credit card. The fraudsters make you fool by gaining access to your information like one-time passwords, credit card numbers, etc. by which they easily hack your account.
So to protect your account from all these frauds, you don’t need to give any of your essential information to anyone, and learn credit cards wisely.
6. Always Make Repayment on Time
The cardholders spend more money than they can afford to repay to learn how to use credit cards wisely. Also, some need to remember their due date because of holding multiple cards. The reason can be anything, but when you fail to repay your credit card before the due date, the card provider starts charging you a very high-interest rate until you fully refund the total money.
However, a proper plan before making a high purchase transaction can help you how to use credit cards wisely. Additionally, you can set an auto-pay to pay your credit card bills. It is the best way to pay your bill automatically on the due date through your bank account.
7. Do not Use Your Credit Card for Cash Withdrawals
Nowadays, many people need to learn how to use credit cards wisely. Withdrawing money through a credit card is a straightforward method. Many cardholders believe that if they swipe, their card only attracts interest if they pay the payment on time. But that’s not true. Credit card companies do charge interest from day one. Therefore, taking credit card advances as if you’re buying this facility makes no sense. Then you pay more money than you have borrowed.
8. Review Your Credit Card Spend
When you prepare a budget and set a limit on your credit card, it becomes essential that you keep tracking your credit card spending by logging in to your credit card account. This method has proven very helpful in knowing how much you spend and where you need to avoid access use of money.
9. Be Aware of the Joining and Renewal Fees
Almost every credit card charges joining and renewal fees; however, it’s your responsibility to take a closer look at all the essentials of the fee structure. Some banks charge more fees which eventually leads to a loss to you. Do opt for those banks that complete all your requirements with great benefits for using credit cards wisely.
10. Be Careful of Credit Card Hacks
Regularly monitor your credit card summary to find out if there is any transaction that still needs to be done by you. If you ever find any such transactions, contact your card providers. Credit card hackers can attack anytime.
Also Read: How to Block HDFC Credit Card
If you have a credit card, then maintaining a credit score is one of your most essential points. Choosing a credit card and using credit cards wisely is a tough call for some. However, above, we have provided you with some essential information about the ways through which the question of 10 tips on how to use credit cards wisely has been completely solved. You can discuss this with your family and friends while opting for the abovementioned tips.
10 Tips on How to Use Credit Cards Wisely – FAQs
What are the things about a credit card that we must consider to learn how to use credit cards wisely?
Ans. The essential things to learn on how to use credit cards wisely– are the annual percentage rate, minimum repayment, annual fee, charges, introductory interest rate, loyalty points or rewards, cash back, etc.
What is the minimum due on a credit card?
Ans. The minimum due on a credit card is when the cardholder has to pay the amount before or on the due date of the payment.
How is a credit card bill calculated?
Ans. The credit card bill is calculated with this formula – ( no. of days counted from the transaction date * outstanding amount * interest rate per month * 12 months / 365.
Do credit cards charge interest daily?
Ans. If you’ve taken a credit card that shows the balance every month, then, in this case, your credit card charges interest daily.
What is the average credit card limit in India?
Ans. India’s average credit card limit is around 2.5 – 3 times the monthly gross salary.