Freedom, flexibility, convenience, reward points, security are some of the benefits of using credit cards. You can pay for regular expenses, convert expensive purchases into EMIs, make ticket bookings, earn reward points and save huge annually. You can even withdraw liquid cash against a credit card cash advance fee.
However, if used irresponsibly, these payment tools can lead you to debts and financial mess.
Quick highlights – Credit card awareness
- Rs. 48,489 Crore – Credit card transactions happened at POS terminals ending February 2019.
- 33% – Users are unaware of paying more than the minimum due amount.
- 92% – Pay more than the minimum due amount on their credit card bills
- 90% – Cardholders are aware of the negative impact of bill non-payment.
Unlike debit cards which draw money from your bank account, credit cards are a type of short-term loan. In every transaction, you borrow the amount from the issuer and repay within a given due date per month. Moreover, there are attractive reward points, discounts, cashback and other offers making your transactions more affordable.
To get the most out of your online credit card, you must maintain financial discipline while using it strategically.
5 tips to make the best use of credit cards
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Full payment of monthly bills
Credit card bills come with a total amount due and a minimum amount due. Paying off the total outstanding amount can prevent debts and huge interests. It also impacts positively on your credit profile.
With the minimum due amount, you need not pay any interest, but the outstanding due is carried forward in the following month’s bill. Opt for the minimum payment only when you have insufficient funds for full repayment. There are various options to pay credit card bills; so, make sure you don’t default.
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Cash withdrawal with your credit card
Several credit cards offer cash withdrawal or cash advance facility wherein users can withdraw liquid cash from ATMs. However, this facility incurs heavy credit card cash advance fee along with various associated costs. The rate of interest is also levied on a per-day basis, starting from the transaction date until its full repayment. Hence, evaluate your financial situation to bear the high costs, and opt for cash withdrawal only when absolutely necessary.
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Redemption of the reward points
Online credit cards are primarily known for their lucrative reward programs. As a cardholder, you keep earning reward points on various occasions, such as achieving a milestone, making an online purchase, booking tickets, etc. Most of these rewards come with expiry dates before which you need to encash those.
Know how to redeem reward points at online outlets or partner stores and avail discounts, gift vouchers, coupons and cashback. You can save considerable amounts with these offers.
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Credit utilisation ratio
Credit utilisation ratio is the amount of utilised credit on your card divided by the total credit limit. Expressed in percentage, it is a significant factor in determining your CIBIL score; i.e. more available credit leads to a better score. Ideally, maintain a credit utilisation ratio below 30% to 50%. Utilising more make you a credit hungry prospect for financial companies.
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Monthly credit card statements
Whether you transact with your credit card or not, providers issue a statement every month. This statement or bill highlights details of every transaction made on the card along with GST, interest rate, cashback or discounts, merchant’s name, accumulated reward points, etc. It also contains billing cycle, total and minimum due amounts, grace period, and more.
Read this statement carefully before payment to find any error, unexpected charges, and spending habits. As overspending piles up huge debts, a thorough read of the statement can help monitor your financial behaviour.
One of the most essential tips is to avail a power-packed credit card which brings exclusive benefits in the market. For example – the Bajaj Finance card packs the power of 4 different cards into 1 and brings industry-first features for customers.
Some of its features include:
- ATM cash withdrawal with a 50-days’ interest-free period
- Personal loan against unused credit limit with 90-days’ interest-free period.
- Savings up to Rs. 55,000 yearly.
- Rewards for every transaction, milestone achievement, online purchases, etc.
- Top-notch security features against online threats, frauds, etc.
Choose to apply for this online credit card through a simple application form. For existing customers, Bajaj Finserv brings its pre-approved loans on credit cards and a host of other financial products such as home loan, business loan, personal loan, etc. Not only do pre-approved offers simplify the whole procedure but also save time. Check your pre-approved offers with your contact number and name only.
Whichever credit cards you avail, utilise it responsibly to avoid paying any interest and make its best usage. In-time bill payments can gradually create a healthy CIBIL score and build a clean credit history.
