Credit card

How to Use Credit Cards Efficiently

Credit Card Benefits

Credit cards help you build your credit-history within the maximum limits.  They help you handle many of the emergency and unplanned expenses. They can win you rewards like cash-back,discounts, and gifts.

When you repay your credit-card balances on time, it can be helpful in securing personal and mortgage loans. Banks and financial institutions prefer customers with credit rating than those who never used the credit cards.

Credit card Pitfalls

The risks of using credit cards could be overspending and purchasing things you don’t really need. You may make blunders without planning a logical budget according to your earnings and repayment capacity. The negative rating can hurt your financing and loan prospects.

Smart Credit Card Usage

 Identify the difference between need, want, and desire. You have to prioritize needs before the other two. For example, you may need a refrigerator and a washing machine for your home. You may want a home-theatre system for your entertainment. You may desire a week-long holiday in Thailand you’re your family.

Cash Vs Card: You may choose to pay by cash when you walk into the neighborhood store to buy chocolates for your kids. You may use the credit card to buy groceries for the month. It could be an intelligent practice to use cash for small payments while using the card for modest and high-value products.

On-Time Payment: Clear all your credit card balances within the deadline. It helps to improve your credit rating. Unpaid credit card debts can follow wherever you go. They can ruin your chances of applying for bigger loans because the banks don’t trust you anymore.

Repayment-Options: There are two ways in which you can ensure on-time debt clearance.The first option is to buy inside your repayment limitations within the deadline.The second option is to request an increase in deadline. You can do it by opting for an EMI at your bank or financial institution. But you may need to pay extra interest in retaining your credit score at a higher level.

Utility-Bills: You can use your credit card for making utility bill payment. It helps you to save cash for emergency funds. If you have not used that fund during the month, you can always use it for repaying your credit card debts within the deadline.

Payday-Deductions:  You can automate repayment by linking it with your pay-day deductions. It prevents from over-estimating the expenses for the subsequent month. Then you will start planning your budget for credit cards within your limitations. The probability of a negative credits core will also get reduced considerably.

Limited-Cards: The recommended practice is to use a limited number of credit cards. If possible, keep only one or two cards. Having too many cards can confuse you and the probability of crossing your repayment limitations.

Travel-Expenses: Make your travel expenses with credit cards.  It helps you save cash for emergency needs. Create a travel expenses budget and make sure you spend within the limitations unless the unforeseen expenses make you use the credit card more often.

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