You have a credit card, you swipe it, and you pay the bill when it’s generated. Simple, isn’t it? But is that all that you can do with your credit card? These days, credit cards are loaded with a gazillion features and benefits, many of which the users forget about in the daily hustle and bustle of life.
There can be, and surely is, more to credit cards than just swiping and paying. If you put your head into it and work a wee bit smartly, who knows, you might end up saving a ton of money annually, and who does not want a piece of that cookie?
From reward points to a simple play of timing, being aware of and using your credit card in the right manner can be much lighter on your wallet. To help you understand this better, we’ve curated a list of 8 ways on how to use credit card efficiently:
1. Using Your Reward Points
All credit cards in India have a reward points programme wherein the user earns a particular number of reward points for spends above a stipulated amount. These reward points can vary card to card and company to company.
Most of the users forget about these credit card reward points after a few months, because they take time to accumulate to a level that can actually be of a benefit to you. Also, you need to read the fine print about the expiration date on these points. Many are valid till only 2 years after they’re earned.
You can garner credit card points and use them to unlock vouchers, discounts and lots more, depending on the rewards programme. You can also contact your bank and ask for a settlement of your credit card bill by adjustment of these reward points, as some banks do allow that to a few select customers.
2. Cashback Credit Cards
Cashbacks have evolved from just being a feature to being the whole USP around which a credit card is based. There are a plethora of cashback credit cards in the market now such as the HDFC MoneyBack Credit Card, or the Citi Cash Back Credit Card.
These cards have instant cashback features on all spends, with varying percentages for different categories like Dining and Entertainment. You can go through the benefits of two or three such cards and compare their features according to your needs. These cashbacks, although they may seem small, make up a considerable amount in a whole year which you could use alternatively.
3. Online Shopping
Many credit card companies are tied up with online stores and merchants to promote their business. To get their users to spend on a particular online store, companies run many discount deals for purchases from the same. From the most elite of cards to the best instant approval credit cards in India, all of them have one or the other offer running, and you can save a percentage of whatever you buy online.
4. Use The Grace Period Wisely
In between the bill generation and bill due date, the credit card holder gets a window of opportunity to make purchases guilt-free at zero interest rate.
The key to making interest free purchases is to familiarise yourself with your credit card bill generation cycle. Once the bill has been generated, the company gives you a certain period of time to pay the amount due in full, which ranges from 25-50 days. In between that period, a user can get leeway on credit card purchase interest.
The catch is that only those who pay their dues timely, and in full, are considered for the interest-free period. Paying late consistently, or carrying your balance forward is a strict ‘No’ when it comes to credit card grace. But if you get your finances in check, this can be a great saver.
5. Avoid Withdrawing Cash
There’s a reason why debit and credit cards are different. Debit cards let you withdraw cash in your bank account, or make payments via the money in your bank account. Credit cards, on the other hand, let you make payments by using the bank’s credit.
Many people make the mistake of withdrawing money from credit cards. While there is no particular rule that disallows a person from doing so, a hefty charge is levied for the same by the bank, which should act as a deterrent for them. Credit cards are not meant to withdraw money from, and that’s what you should keep in mind.
6. Forget Minimum Payment
The option to pay the minimum amount due for your credit card bill, and carrying the rest forward is a big mistake. Do not settle for the minimum due. If possible, pay the full amount due. Many believe that paying the minimum due would suffice and that no penalty would be levied, but that’s generally not the case.
The remaining balance would be carried forward, and interest would be levied on that. Fact: Credit card interest rates range from a whopping 35% to a mind-blowing 50%. To avoid being perennially in debt, pay the whole amount as and when required.
7. Multiple Credit Cards For Higher Limit
It isn’t necessary to just keep one credit card, especially as it can hold back your credit limit. You can always apply for another credit card for improving your credit limit, as well as lowering the utilisation rate.
The utilisation rate is the ratio of credit used to the total credit limit. Increasing the credit limit would usually lower your credit utilisation ratio and increase your credit score.
Finding it a little tough to pay off the credit card bill on that last huge buy? No need to fret now, as you won’t be carrying forward your unpaid dues anymore. Many credit cards have enabled the feature to turn hefty purchases into smaller, no-cost EMIs. These instalments make it much easier to pay off your credit card debt without breaking a sweat. However, your credit limit, equivalent to the amount of the EMI, would be frozen.
In The End
Credit cards do not spell doom for the user if used responsibly. In fact, they can come in handy in a lot of circumstances and can save you money while at the same time provide you with luxurious privileges.