Over the years, a lot of myths have been attached to credit cards. A lot of people think that having a credit card can disrupt one’s financial discipline and push them to overspend. Another group of people have the idea that credit cards will push you into debt. These assumptions are popular but often unfounded.
The truth is that if you stick to a few rules, a credit card can do more good than any other payment tool. Firstly, they offer the convenience of going cashless everywhere. No matter how small or big of a transaction you need to make, simply carrying your credit card will suffice. Secondly, they allow you to earn cashbacks and reward points on everyday purchases. These discounts and cashback can help you save a significant amount of money.
Additionally, the accrued reward points can be redeemed for vouchers and gifts. Lastly, credit cards can also come in handy in case you’re going through a financial emergency. Cards like the Bajaj Finserv RBL Bank SuperCard can give you an emergency cash advance against your cash limit. Therefore, there are multiple ways in which you can benefit from a credit card, given that you use it judiciously. Here is how to use a credit card wisely.
Analyze your spending habits
Different credit cards offer different benefits. A travel credit card is best suited for someone who spends a lot of money on booking flight tickets and hotels. On the other hand, shopping credit cards often partner with retailers and online shopping giants to give the customers an opportunity to earn accelerated rewards while shopping. Hence, choose a credit card that will best serve your interests. Analyze your monthly spending and see where you spend the most amount of money. If it’s online shopping, a shopping credit card would be ideal for getting loads of cashback and reward points.
Another thing that needs to be seen is if you’re spending unnecessary money on benefits you don’t use. If you don’t spend money overseas, then don’t opt for a credit card that offers heavy rewards for overseas purchases. Similarly, if it’s your first time using a credit card, don’t go for high-end ones. A simple entry-level credit card can give you what you need and also have a low rate of interest.
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Only spend what you can pay for
If you think you have a tendency to overspend, treat your credit card as a debit card with additional perks. This way, you can convince yourself to only spend money on things that you absolutely need. Do not make unnecessary luxury purchases thinking you can pay for them the following month. Only make those purchases that you can pay out of your next paycheque. This will help you build a good financial habit and also let you enjoy the numerous perks that come with a shopping credit card.
Save the due date and pay your bill on time
After the end of every billing cycle, you will get your credit card bill that tells you the outstanding amount that you’ve borrowed using your credit card. The due date to pay the amount is typically 21-30 days after the billing cycle ends. Make sure to pay your dues on time so as to avoid piling up debt. A certain amount of interest will also be levied on this carry-over amount if you fail to pay it every month. This will only end up increasing your financial burden.
Redeem your rewards
Reward points can be earned for every purchase you make. For some specific purchases, credit cards even offer accelerated reward points. Once these reward points accumulate, they can be redeemed for a number of things – from vouchers to gifts. Some credit cards also offer air miles which can be saved up to buy a flight ticket at some point. Make sure to redeem these rewards so that you truly feel happy about using your credit card.
Keep track of your purchases
There are two reasons why you need to keep track of your purchases. One is that it helps you identify any fraudulent activities on your credit card. The other is to identify where you’re spending more than what you need to. If you see that you’ve been spending more on your car’s fuel, it can help you make decisions that will save you money. Hence, it is a good habit to inculcate.
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