If you want to make the most of having a credit card, you need to keep a few key things in mind. This article will look at some ways to make the most of credit card benefits.
Plastic money has been a game-changing financial tool in the 21st century. It has revolutionized the concept of money lending and repayment. Different types of plastic money include credit cards, debit cards, pre-paid balance cards, smart cards and, so on. Of these different types of plastic money, credit cards have been the most alluring one. People have been turning to credit cards owing to the offers, benefits and, features. However, one has to be very careful with credit cards since lack of financial planning and over usage can put them into serious financial turmoil which is difficult to shake off.
With its increasing popularity, financial organizations have come up with different types of credits cards to suit your need. Your credit score, repayment status, income and, money management history will decide the type of card you are eligible for. Ensure to keep an eye on your score and credit file. Let’s discuss how to get the most out of credit cards without landing ourselves in financial troubles.
6 Effective Tips to Get the Most Out of Your Credit Card:
1. Dig Deeper by Doing Research
This part is unavoidable and has to be done by the user. You need to figure out what is the purpose of the credit card you are applying for! Once you understand the purpose, you will be able to do the due diligence and conduct thorough research on the different types of cards. Look into things like the annual maintenance charge, the minimum total expense that can be converted into an EMI, the one-time processing fee for converting transactions into EMI, the acceptability of your credit card across various platforms and sites, etc.
2. Choose the Rewards Credit Card
Each credit card comes with its unique features and benefits. You will need to find out what works the best for you. Of course, rewards are the best features of any credit card. Choose a card where you can avail these rewards with ease. For example, the Chase Sapphire Reserve promotion enables you to earn rewards even more quickly. It will return a percentage of what you have spent back to you. That’s what we call a double benefit!
3. Settle the Bill in Full
This point is very important. Most users do not know this, but credit cards levy heavy interest if the bill is not paid in full within the interest-free period. You will notice that there is a minimum due and a total outstanding. If you choose to repay the minimum due, the rest of the amount is carried forward to your next bill cycle. Not just that, a huge interest is levied on the same. Therefore always make the full payment and keep enjoying the benefits. This will ensure that you do not get in a financial trap that will only keep getting tighter every month.
4. The Magic of 55 Days
Your credit card offers you a minimum repayment time of 30 days that can be extended by a maximum of 25 days and this period is interest-free. Use this time smartly and make the expenditures. For example, if you visit a non-network hospital for an emergency and your insurance does not cover it under its cashless claim, use your credit card to make the payment at the hospital while you send your claims to the insurance company separately. Eventually, pay back the card company once your claim is settled (keep in mind the repayment deadline), and you might not have to use much out of your pocket.
5. Set a Budget and Adhere to It
You see these lucrative offers online about sales and massive discounts and it makes you want to buy stuff that you don’t even need. Having a credit card gives you an edge in these situations as you can buy anything even if you do not have the funds. However, this is where you need to draw the line and check yourself. Make a rough budget for yourself and stick to it. While making this budget keep in mind your other expenses like bills, utilities, and of course savings. This will keep you in line and stop the chances if you drain your savings due to any impulsive expenses.
6. Claim Those Hard-Earned Points
If your card comes with credit points, you need to keep an eye on them. For reward credit cards, the more you spend the more points you earn. Sometimes those points can be used to earn cashback other times they can be used to make purchases. Some of those points have an expiration date, so use them in time and do not let them go to waste.
How to Avoid Extra Fees While Using Your Credit Cards
While you might not be able to avoid the annual fees you may be able to avoid others. We have already explained how to avoid the late fee. Try not to withdraw cash from your credit card to avoid cash advance fees. For making any sort of expenses abroad, pick a card that offers free transactions in a different country to avoid the foreign transaction fees.
Try Cards with Different Benefits
If multiple members of the family use credit cards, try to pick cards with different benefits to get the most out of them. Do thorough research and pick the one that is not included in the offers on the credit card your family members have. Choose from offers like Refund on gas, travel insurance, protection on price, cashback on different items.
Keep an Eye on the Monthly Statement
It is important to check all the transactions carefully before paying them off. In case you notice any suspicious or unauthorized transactions, call your card company and sort them out immediately. Also, remember to look for all refunds due to failed transactions and make sure you have received them. If possible download the mobile app so that you can live to track your expenses.
Timely Repayment Is the King
To avoid an exorbitant late fee, ensure to make payments on or before time. The credit score is tied to all the repayment history, be it loans or credit cards. If possible, set up an auto-debit from your bank account to avoid defaulting. Try to consolidate all your payment under one card even if you have multiple. This way you will not miss out on payments.
Having said a lot about the benefits of the credit card, it is clear that owning a card comes with both pros and cons. For example, having a credit card can highly diminish the intention of saving and investing, thereby risking your financial future. If you spend more than your capacity it might put you in financial jeopardy.
A lot of people have landed themselves in major financial trouble with credit cards. On the other hand, smart and planned usage of the card can give you the benefit of a good credit score, amazing offers, and most importantly help you in times when you need funds and don’t have any to spare.