Smart Ways to Use Credit Cards and Avoid Debt
A credit card is a physical or digital payment instrument issued by banks with a pre-approved credit limit. It is also called plastic money. Customers can use these cards for online and offline purchases such as flight ticket bookings and bill payments.
A credit card is a type of revolving credit, which means that users can borrow money up to the specified credit limit, repay it later, and borrow again when needed. To avoid accumulating too much debt on such cards, customers must use them sensibly. Read on for helpful credit card tips and how to steer clear of debt.
6 Effective Credit Card Strategies
- Track spending
Loans, including credit card bills, should ideally stay within 35% of the monthly income. Thus, users must note down the monthly amounts spent on each category such as groceries, school fees, petrol, etc. Tracking expenses can help one set card transaction limits to avoid overspending.
- Pay credit card bills in full and on time
Credit card bills are issued every month and must be paid in full before the due date. Non-payment or partial payment attracts late fees and interest and also affects the user's credit score. A bad credit history will make it difficult to obtain loans at lower rates in the future.
- Calculate a suitable credit limit
Each customer must choose an ideal credit limit based on their income and expenses. While a very high credit limit may encourage overspending, a very low limit may not be useful for big purchases. Setting the right credit limit also helps prevent non-payment of credit bills and maintain high credit scores.
- Go for contactless credit cards
Contactless credit cards are safer and lower the risk of contracting infectious diseases while in public. Users need not swipe or insert the card into a point-of-sale device and enter their personal identification number. They just need to tap the card on the device to complete the payment. Federal Bank offers contactless credit cards for smooth checkouts and instant payments.
- Check credit card statements
Users must thoroughly check credit card statements regularly as it can help avoid wrongly billed amounts and additional charges levied on transactions. Users can get such mistakes corrected and avoid transactions attracting high fees.
- Redeem rewards and offers
To encourage customers to use credit cards, banks provide free offers in the form of cashback programmes, gift cards, discount vouchers, etc. They also offer reward points that can be converted into cash. Keep in mind that these rewards and offers may have an expiry date and must be redeemed on time.
The Bottom Line
Credit cards are easy to use and help manage finances smoothly. They also help build a strong credit report, which comes in handy when an individual applies for loans.
Federal Bank offers Visa, Mastercard, and Rupay Credit Cards with attractive benefits and 24/7 customer support.