#FinancialBytes: Have a credit card? 5 tips to use wisely
Given the ease and convenience of making payments that credit cards offer, they've now become a household phenomena. But there's a number of credit mistakes and errs people tend to make when using credit cards, that affect their credit score, spending, and financial status in general. So, to avoid such mistakes, here are top 5 tips to help you use your credit card wisely.
Avoid extravagant expenses, and always settle repayment bills in full
Since credit cards give users the freedom of spending more than they have, people often make the mistake of making a massive expenditure, and later find themselves in a problematic situation. So, always keep your spending in check. Further, always repay you monthly (depending on your billing cycle) bills on time, and in full, so to avoid being charged extra interest/penalty on outstanding balances.
Go for a practically feasible credit limit; set a personal-limit
Don't get fooled by your bank or credit card company into setting an unfeasibly high credit limit on your card. This way, one may end up buying more than they can repay for, by the end of the billing period. Also, apart from the bank-imposed limit, one should set a personal-limit (at 30-40% of total credit-limit) and stick to it, to avoid mindless spending.
Make sure to use right credit card for right purpose
You may already be aware that banks issue different credit cards for varied needs of the buyers. So, one must carefully use the appropriate card depending on the purpose; say travel card for traveling, fuel cards for fuel expenses, reward cards for shopping, and so on. Make sure to use the right card at the right place.
Be wary of credit card frauds to secure your finances
Of course credit cards make financial transactions convenient, but owning it also comes with a certain set of risks, which should be taken care of. A number of illicit and unlawful activities are done by hackers and cyber-thieves to dive into your credit card details when you shop online. Additionally, always be wary of anonymous merchant calls asking for your credit card related information.
Keep track of your reward points and enjoy freebies!
All credit card issuing banks and companies come up with reward point offers on predetermined spending benchmarks by customers (say Re. 1 reward on every Rs. 125 spent through the card). There are some exclusive store deals as well, which one should be mindful of. Keeping all rules and deals in mind, one should try and maximise their reward points and enjoy the freebies!
