How to Use Credit Cards Wisely
Using credit cards is a piece of cake. You can wave it through the credit card reader or insert it, and enjoy your purchases. But things are not that simple! We will help you know everything about credit cards so that you can easily stay away from credit card troubles.
How to use Credit Cards wisely
Credit card issuers offer customers a certain amount of credit they can borrow again and again. All the consumer has to do is to stick to the terms and conditions of the credit card. The conditions state that the user has to pay on time, stay within the credit limit, and should not commit credit card fraud or purchase illegal items.
Payments on your credit card should be paid on time. However, you can also choose to pay your balance over time (by paying minimum balance and rolling over the rest of the credit over the next cycle). If you do not pay the minimum balance by the due date, you will face steep penalties. Also, you will have to pay interest on the balance you choose to pay over a period of time.
See using a credit card is simple. Now Let’s dive into the details.
How to choose the Right Credit Card:
You should not just apply for a credit card at random. Access your needs and then apply for a card according. Every day we see numerous ads or receive a number of offers in the mail. But we should check out on our needs and go through all the credit cards in the market. While applying for a card know about the different fees, rewards, other perks, interest rates, annual charges, renewal fee, etc. Check out some tips on how to choose the right credit card.
Know your needs: What is your basic purpose? Do you want to shop online, or make a large purchase on Zero EMI or do want to earn rewards on purchases? Many people also take credit cards to build their credit and improve their credit score. .
Understand your needs and then apply for your credit cards accordingly. If you are a shopping buff, then you could choose to apply for the best shopping credit cards. Frequent travelers could apply for cards that offer free travel voucher and lounge access. If you are unsure of your credit cards needs and the best credit card for you, you can contact http://pointsbycard.com/ who will help you analyze your needs and they will also suggest the best credit card for you.
Always remember to Compare credit cards which are similar. Compare the fees, rewards, interest rates, and perks offered by various credit card issuers. Ideally, you should read all the credit card terms online carefully at each credit card issuer’s website. Or you can also contact pointsbycard.com so that they can compare the cards for you and offer you the best advice.
What other things you should keep in mind before applying for a card?
Know your credit rating: Do not apply for a card randomly, know your credit rating, and apply for a card accordingly. You will ideally need a higher credit score to get higher rewards credit cards, and premium credit cards.
Understanding Credit Card Fees:
All credit cards come with several fees. Some can be avoided; others cannot. E.g., in some cards annual fee is waived off if you make purchases above a ceratin amount. Let us take a look at some of the common credit card fees:
Annual fee: As the name suggests, this is a fee charged once in a calendar year. Some credit cards can waive the annual fee if you make higher spends.
Late fee: Credit card issuers levy a late fee charge if you don’t make the minimum balance payment or if payment is received after the due date.
Cash advance fee: This fee is charged if you use your credit card to withdraw cash against your credit limit.
Balance transfer fee: this fee is levied when you transfer a balance from one card to another credit card.
Finance charge: When you roll over a balance on your credit card, you are charged interest .
Foreign transaction fee: This fee is levied when you make purchases in other currencies.
Understanding Credit Card Interest
Credit card issuers levy a charge interest on your credit card if payments are not made on time or if there is roll over balance. The interest rate is called as an annual percentage rate or APR. APR can be different for purchases, balance transfers, cash advances, etc.
Earning Rewards Using Credit Cards:
Rewards can be earned through cashback, points, etc. You can make use of these rewards by accumulating these points and then redeeming against purchases, gift cards, travel expenses, gift cards, and merchandise.
If you are using the best travel credit card, then you will accumulate more point for travel expenses as compared to shopping. It is therefore imperative to know the rewards system and terms and conditions for your rewards and its usage.
Managing the Credit Limit
A credit limit is a maximum amount you are allowed to spend on your card. The credit limit is usually based on credit history, score, income, and the type of credit card.
If you stay within the credit limit, you will easily able to avoid penalties and maintain a good credit score. Your credit card issuer, looking at your good credit history may also automatically increase your credit limit. Additionally, you can also request the card issuer to increase your credit limit.
Reading the Billing Statement
Each month, users receive a credit card billing statement that mentions all the transactions made within the billing cycle. The statement also includes your current minimum payment, your outstanding balance, and the due date.
The statement will arrive on your mentioned email or at the billing address. However, don’t blindly believe the statement, read through it, and point out any discrepancies immediately.
Any unapproved charges should also be reported to the card issuer so they can be removed from your account.
Making Credit Card Payments
If you use a credit card, you are required to make a payment every month. Even though the credit card issuer only requests you to make the minimum payments, you should pay the entire balance so that you don’t incur interest in it. It is important to pay the entire amount before the due date to avoid penalties.
Closing a Credit Card:
Not all cards can be kept forever. You might close a card due to downsizing the total number of credit cards, or you want another similar card, or due to change in conditions, etc. To close a credit card, you need to make a phone call to your credit card issuer, and clear your balances and close the account.
But remember before you close your credit card, remove any automatic payments or subscriptions so that you don’t face penalties from your service providers. Also, use your rewards before closing the card.
Avoiding Credit Card Debt
The solution to avoiding credit card debt is to buy only what you can afford. Pay your balance in full every month. Till the time you can pay off your credit card balance, you are staying out of debt. Once you are not able to pay your full balance, it’s time to rein in your credit card spending.
What to Do About Credit Card Fraud
As soon as you detect fraud contact your issuer and let them know about the same. Many credit card issuers often confirm before expensive transactions or decline unusual purchases. You can restrict credit card fraud by shielding your credit card information. Don’t give sensitive credit card information to suspicious websites or post them on the internet. Monitor your credit card transactions and report any suspicious charges immediately.
Using your credit card responsibly is easy, pay your bill on time and then enjoy huge benefits.