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6 Quick Tips to Use Credit Card Responsibly

As India embraces globalization, many things are changing in the country, including the modes of payment. Owning a credit card has changed from luxury to necessity as we face cash crunch every now and then. But one should know how to use a credit card or the card holder can face many penalties from the lender. If you are a credit card holder or getting a credit card for the first time, these quick tips will help you along the way.

  1. Pay Your Credit Card Bills On Time:

It’s easy to purchase desired things with a credit card as you buy them on credit. You don’t have to pay the price right away. But when you do, make sure that you pay it on time. You can pay it in one go or by regular EMIs. But if you fail to do so, banks will charge you with late repayment fees. It will also affect badly on your overall CIBIL score. You can use the auto-debit feature offered by banks to pay your credit card bills or set a monthly reminder on your phone. Whatever you do, make sure you pay on time.

  1. Maintain Your Credit Utilization Ratio:

Banks offer a specific credit limit on each card. You are not allowed to exceed this limit. Even if you exceed it, it reflects badly on your CIBIL score. Even utilizing the credit amount to the full can have negative impacts on your CIBIL score. Banks consider you as a credit greedy customer when it comes to take a loan in future. The ideal credit utilization ratio is of 40%.

  1. Avoid Cash Withdrawal:

If you want to withdraw money from an ATM, use a debit card not the credit card. Use your credit card for cash withdrawal only in the situation with extreme emergency. Banks charges hefty interest rate on credit card cash withdrawal; it’s nearly 2.8% per withdrawal. The interest rate keeps mounting up if you don’t payback on time. So it ranges from 24% to 48% per annum.

  1. Don’t Go On A Buying Spree:

Always remember that you have to pay back the money of things you purchase at a certain point of time. You are supposed to pay back that amount with interest rate. So remember the more you use your credit card, the more you have to pay with interest rate.

  1. Use The Benefits Neatly:

Credit cards are always showered with various benefits as cash backs and discounts. If you want to buy an expensive product, buy from a place or portal where you can use these benefits on your credit card. You can earn reward points and make use of them too. But make sure to redeem them on time as the reward points on credit card come with a specific time frame.

  1. Check Your Bills Regularly:

Whenever you get your credit card bill, make sure you go through it thoroughly. It will always help you to plan your future finances better. Even if there is a credit card fraud or any default payment, you get to know about it immediately by reviewing your credit card statement.

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