4 Smart Tips to Use Your Credit Card Wisely
While on the one hand, they have made our lives easier by providing us extended financial aid in times of need, credit cards have also landed many individuals in deep trouble given their negligence and imprudence. However, if you use your credit card judiciously, you can reap its major financial benefits without having to pay hefty interests that most other forms of debt instruments entail. Read on for a few smart ways in which you can use your credit card wisely.
Choose Your Card and Its Limit Cautiously
Before you apply for a specific credit card, you must consider a few important aspects such as your purchase patterns, monthly expenditure, current financial health and most importantly, your financial requirements, and monthly rent expense. For instance, if you are a frequent flier, you may go for a card that features exclusive airline offers such as free airport lounge access or flight reservation discounts. Also, it is advisable to set a credit limit that suits your monthly requirement and does not end up making you a spendthrift.
Keep Your Dues Cleared
Making timely payments of your credit card balances is the most critical aspect of ensuring that you never have to pay anything extra in the form of fees or interest. When you miss out on your credit card payment by the due date stipulated by your bank, you get trapped within a vicious cycle of hefty interest accumulation that not only drastically impacts your financial health, but also ends up as a blot on your credit worthiness.
Spend and Earn
It is a good idea to use your credit card to cover your monthly bill payments. This serves two purposes. The first is that since most credit card companies offer their customers the facility of gathering reward points every time they swipe their card to make a purchase, you can also avail the benefits of the reward points that you accumulate. Also, once you have made the payments, your credit limit will get blocked for the swiped amount, leaving less room for you to indulge in mindless overspending.
Refrain From the Habit of Keeping Multiple Credit Cards
While the prospect of having a massive cumulative credit limit courtesy a series of credit cards might seem thoroughly attractive, it turns out to be a fairly unhealthy practice in the long run. Keeping a track of the bill payments of multiple credit cards is a complicated process and might even lead you into missing out on your payments every once in a while. Also, since closing down a credit card account negatively impacts your credit rating, it makes more sense to adhere to a single account that you can handle for a long time.