10 Tips to use credit cards wisely

10 Tips to use credit cards wisely

Most of us have a credit card or two or planning to have one shortly. Credit cards are a wonderful tool and have made our financial life easier and simpler. 

You may have often heard about the potential drawbacks of credit cards use. If you can use the credit card responsibly, it will not cause any damage to your financial health. 

In this post, let’s take a look at the tips to use credit cards wisely.

10 Tips to use credit cards wisely

Following are some important tips to use credit cards wisely. We should follow the below tips to use our credit cards wisely.

1. Choose the right Credit Card

Choosing the best credit card is an important decision. There are various types of credit cards in the market with different fees, interest rates, rewards and other incentives. All the credit cards have different features to suit your different needs. 

Therefore, it is very important to choose a right credit card for you. From the available credit cards in the market, you should choose the best credit card that fits in your ways of managing money.

2. Know the rate of interest and other charges

Credit cards issuers charge interest on your credit card outstanding dues. You should be well aware about the rate of interest and other charges, before start using a credit card. 

Read the terms and conditions of the credit card carefully as the details of interest rates, late payment penalties, cash withdrawal fees, annual fees and other charges are mentioned in terms and conditions. 

Your credit card may have a grace period during which you can pay all your outstanding dues to avoid penalties. Usually grace period is about 20 days depending on your credit card terms and conditions.

3. Know the credit limit of your card

The credit cards provider sets your credit limit on the basis of various factors such as your income, credit score, spending habits and repayment history. 

Here, credit limit means the maximum amount the credit card provider allows you to spend on your credit card. Always keep a practical credit limit. If you are a first-time credit card user, it will definitely help to keep a tab on overspending.

4. Set a personal credit limit for your card

The credit cards provider sets a maximum credit limit for your credit card. It is always good to keep a personal credit limit too. Try to not spend more than 30% of your total credit limit. 

If you are a first-time credit card user, it will definitely help to keep a tab on overspending.

5. Avoid to use cash withdrawal facility

The facility to withdraw cash from credit cards is very tempting but does not fall into the trap, it is not your debit card. The interest rate on cash withdrawal from credit cards is the highest. 

Therefore, unless there is an extreme emergency, you should not use cash withdraw facility. Instead of withdrawing cash from your credit card try to swipe it wherever possible.

6. Check your credit card statement regularly

All credit card users receive their credit cards statement every month. Most of the people already know the total amount due so they don’t care to give the statement a reading. 

This is not a good habit and sometimes can prove to be costly. If there is an incorrect information in the statement, that might be overlooked. 

The statement of your credit card contains information about all transactions, credit limit, and available credit limit; cash advance limit and status of reward points.

7. Pay the full billed amount of your credit card

When you pay only the minimum amount due of your credit card bill, you are focusing on paying more in interest charges later. 

This habit can get you into serious monetary trouble after some time, particularly if your credit card charges a high-interest rate. 

This will also affect your credit score. Therefore, when you receive your credit card statement, always pay the full billed amount of your credit card bill.

8. Keep a track of the rewards point and cash back offers

Almost all the credit cards offer rewards point or cash back. When you start using your credit card keep a track of the rewards point and cash back offers. 

You should know the reward program and use your credit card accordingly. You can earn reward points and then redeem your reward points for cash back, gift cards and merchandise. 

You should also know the redemption process and rules with regards to redemption.

9. Always check alerts

Always check all alerts you receive from your credit cards issuer through email or SMS. Credit cards issuers providing notice about the addition of new fees or increase in existing fees. 

Through these alerts, you will remain updated about your credit cards.

10. Do not share your credit card details

Credit cards are a wonderful financial tool, which if not used with care can damage your financial position. You should be fully aware of its working and implications. 

Never share your credit cards detail to people who ask for this. Before using your credit card online make sure the website is secure and your browser displays the secure lock.

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10 Tips to use credit cards wisely