Get the Most Out of Your Credit Card

Credit Cards offer more than they are credited for. In fact, the benefits offered by them have the potential to outweigh some of their limitations.

Choose the right Credit Card

This is the first step you need to take to maximise the benefits from your card. You should look around for a card that is in line with your spending behaviour. For instance, if you are an avid shopper, make sure you get a card which offers great discounts and cash-backs when swiped at retail establishments. On the other hand, if you are going to use your card on vacations, ensure that it has attractive offers on international transactions or airline miles.

Maximize the interest-free period

Schedule your maximum spending from the card close to the date right after your statement gets generated. This will allow you a period of over 45 days to pay your bill, interest free. For instance, if your statement gets generated on the 15^th of every month, and your due date is the 30^th of the upcoming month, you can schedule expensive purchases from the 16^th to 19^thso that you have 42-45 interest-free days. Needless to mention, making purchases near the due date isn’t a good idea, as you will be required to pay the bill almost instantaneously.

Use discounts and other offers

Most Credit Cards Offer numerous discounts. In fact, if you chose to pay at suggested establishments via certain mobile wallets, not only can you avail great discounts, but can also earn cash back and other rewards. If you plan your spending well enough, you can end up saving as much as 30-35% on numerous purchases.

Redeem reward points

Credit Cards help you earn reward points on every purchase you make. However, reward points usually expire beyond a certain date. Hence, make sure you redeem the reward points in time. You can also choose to get in touch with the customer care centre of your Credit Card company to seek help for redeeming the points. Moreover, if your company has rolled out an offer that you like, you can always place a request for the offer to be applied to your card, and enjoy its benefits.

Make your Credit Card your primary mode of payment

Most Credit Card companies offer cashback or reward points, for every transaction you make. They also have tie-ups with various chains and establishments for special discounts and offers. Hence, make sure you swipe your card as often as possible (of course, make sure to pay your Credit Card bill in time). The reward points you earn can be easily redeemed against one or more of the gifts offered by the company.

Do not withdraw cash

Make sure that you don’t use your Credit Card for cash withdrawals unless absolutely necessary, as this transaction incurs interest from the day you withdraw, till the date of your statement. Since the interest rate is as high as 3-4%, this decision is not financially viable. Also, avoid purchasing currency or traveller’s cheques using your card.

Pay your bills on time. Always.

This is an obvious hack to making the most of your Credit Card. If you have any pending amount on your Credit Card bill, not only are you charged interest on the same, but you do not get any interest-free period on new transactions as well. Again, partial payment of your bill will prove to be of no help. To ensure that you are not charged with any interest at all, you must pay your bill in full, before the due date.

If you wish to exploit the benefits of your card even further, pay more than the minimum amount due, and enjoy lowered interest rates on future transactions.

Maintain a favourable credit score and credit utilization ratio (CUR)

CUR refers to Credit Card usage with respect to the maximum spending limit. For instance, if the credit limit is 1,00,000 and you spend 70,000 in a month, your CUR will be 70%. The CUR will reflect your spending habits as well as your credit managing ability. A high CUR indicates that you are consistently in a cash crunch or are a compulsive spender. None of these help your credit history. Hence, it is advisable that you maintain a relatively low CUR. It is advisable for you to maintain a CUR of 30%.

Ensure your credit is as close to 750 or above, which can only be maintained if you avoid glitches like missed payments and defaults.

Now that you know, how to make the most of your Credit Card, make sure you apply for one at the earliest! Don’t know where to get started? Let our Cards Specialist can help you based on your needs and preferences.