Credit cards have become immensely popular in recent times. Lots of people use it for various transactions. But, do you have any idea of how to use a credit card wisely? Generally, most of us misuse or, overuse credit cards due to which, we fall in the debt trap and can’t handle it. This happens because we don’t know how to use a credit card sensibly.
Credit card is good in case of emergency or for long term purchase but we humans have a tendency to misuse everything. Credit cards are a convenient way to pay for the things you want. But, convenience comes at some cost. This article is all about how to use a Credit card wisely so that you don’t need to pay any extra cost.
Also, Read | Nine Advantages of credit cards that you must know
The fact is, everyone knows how to use a credit card but only a few people know how to use it wisely. I hope you agree?
Here are 6 smart ways to use a credit card wisely:
1. Understand Your Card Type
How many of you have a credit card? Probably many of you. Did you guys just take the card because it was free or someone has told you thousands of reasons to have it? If this is true, you have taken the card just because someone has convinced you than the card may not be your requirement. Before signing up, you need to read the terms and conditions/rules according to your spending. There are a plethora of cards available which provide discounts while some of them doesn’t provide any.
2. Keep a record of your spending
It is the most important tip for your daily life and to use a credit card wisely, which we often forget. Even though I am also one of those who like to keep track of spending. Doing this, I know how much I have already spent and how much I can spend more. This is the best way to stop or control yourself from unnecessary spending. As you know credit cardholder receive bills on a monthly basis, so spend in a limit that you can afford to pay the full bill on time.
TIP: Check your Credit card statement regularly.
3. Pay credit card bill on time
When you receive the monthly bills for a credit card check the payment due date, and pay it on time to avoid interest charges. Make a habit not to wait for the last date to pay the amount. Pay before the due date to avoid a last-minute rush. Once missed, the due date can result in many extra expenses. If you are not able to pay full then also at least try to pay the minimum amount from that bill.
4. Minimize your card repayment
If you are paying a minimum amount of bill each month then you’ll have to pay lots of interest fees and it will take many years to pay off your bills.
If you’re struggling for monthly payment, then select the card which has less interest rate. But remember before switching close the previous card.
5. Set a sensible card limit
Your card limit is the amount you know you can repay. If you cannot afford to pay your monthly bills then tell your card provider to reduce your limit. You can do this by visiting the branch or online also. Your card will update within 1-2 business days.
Decreasing your credit limit can also decrease your credit score but anyway, the point is if you are unable to pay the total amount then either decrease your credit limit or choose a card with a lower interest rate. You can ask your card issuer anytime to increase your credit limit if you want to do so.
If you need to increase your credit limit for special purchase then also you can do this. You just need to pay the debt down quickly, then again you can lower the credit card limit after the purchase.
6. Closing your credit card correctly
Closing your credit card doesn’t mean you just need to cut your card. There are many more things to do. If you don’t close your card correctly then your card issuer can still charge fees and penalties.
You can cancel your card in two ways i.e. either by calling or online. Let’s see how?
1. By calling
You just to call your credit provider and ask them to close your account. They will ask you about your details and identity because the primary cardholder can cancel the card. Before cancelling, your balance should be Zero. Note the date and time of your call and also the official name with whom you have talked. Follow up to check your card has canceled or not
2. By Online
You have another option to close your credit card i.e. online or say internet banking. Click on the link to close your card and read the full condition and rules. Your card will be canceled only when you receive a confirmation message otherwise follow up.
You need to be sensible every time doesn’t matter whether you’re choosing, using or closing your card. One wrong step and you’ll have to pay extra cost for that step. Be Sensible Enough!
If you have any suggestions or any important point I have missed that you know then comment below we will love to add that point.