While debt is still perceived to be bad, credit card which is a deliberately taken short term loan provides convenience when it comes to managing one's spending. This instrument even score over other new payment modes such as UPI, G-Pay etc. in the sense that these options are linked to one's bank account and for paying off any vendor you need to have balance in your account, which is though not the case with credit card that comes with a free credit period of some 45 days.
So, credit card if used wisely is a quick, neat, efficient payment option that even assist in analyzing one's spending behavior i.e. where and how much you are spending. Apart from this, it also provides certain reward and bonus points. However you need to be careful with your credit card usage as else you may be trapped in a debt whirlpool.
Here are thus provided some tips and tricks to make the most of your credit card:
1. Match the credit card to your prime need:
Personal finance experts even hail the idea of maintaining a portfolio of credit card for varied purposes. Say for instance, for shopping of household grocery and other daily-use items, you can opt for the credit card that offers discounts and bonuses on spending on these items via card. Also, if you have to travel long distances by road, you may go in for the co-branded petro cards that on an automatic basis reverses the transaction charge of about 2.5% levied for paying fuel bill through card. So, basis your need you can choose the credit card appropriately.
2. Clear off the outstanding dues in full on your credit card by the due date:
It is nothing more than a marketing gimmick by the credit card issuing company that says you can partially pay against the spends on the credit card. As if you resort to such a practice, your debt will only pile up with time.
This is because if you end up repaying only the minimum amount due which is just 5%, your card issuer will charge interest rate @ 3% per month at least from the date when you have put your card to usage and this works out to be a hefty 36-40% interest on a per annum basis. So as far as possible do not overspend beyond your capacity and clear off the credit card dues well within allotted time.
Herein you can also link your credit card to your bank savings account and give standing instruction for auto-debit facility such that you do not miss on the credit card payment by any chance.
3. Monetize your accumulated reward points in time:
Your credit card issuing bank for the trust you have placed on them and credit card usage, provides you with certain reward points that get accumulated over time. However these come with an expiry date i.e. if not redeemed well within the stipulated time period these become useless. So, you should monetize your reward points in time and this can be done either online or at some of the select outlets depending on the terms and conditions of the credit card.
4. Swipe your credit card for cash withdrawal only in absolute emergency:
While many may not know it, when you withdraw cash on your credit card, there is levied a huge 3-4% service charge on the amount withdrawn. This transaction is however subject to a minimum fee of Rs. 200-Rs. 1000. Also, there is an additional interest cost and GST charged for the withdrawal. So, before resorting to such an option for quick cash you also need to factor in the high cost involved.
5. Make the most of the different invites you receive for being a premium cardholder:
Premium customers of some of the card issuing companies including HDFC, ICICI, Citi, Kotak are invited for different get-together and other such events. This provides a good chance to expand one's social network and meet like-minded people.