Credit cards today have become a part and parcel of our lives. With multiple discounts and offers, you can purchase almost anything right from vehicles, furniture and many more. These best credit cards come with cash back schemes; EMI offers that can help you afford all the luxurious items. It helps you when you don’t have cash on you. It helps you when you require money to deal with family emergency or medical expenses.
All these benefits sound good no? Yes, Credit Cards can help you remain happy always. They also can help you get a loan at the lowest interest rate.
Is this possible?
Yes. Depending on how well you use your credit card, you can easily get an instant personal loan at the lowest possible rate.
What do we mean by using credit card well?
There are 3 ways you can utilize your credit card to the best level;
Paying more than “minimum amount due”:
You like to swipe your credit card and purchase or spend as per your wishes. But at the end of every month, you do have to repay the bill because this is a credit card and not a debit card. No one likes paying bills but as a responsible citizen, you must pay the bill amount. It is possible that the bill amount will be too high and hence in order to ensure the customer is not charged late fees or penalties, Banks allow the customer to make a payment which is “minimum amount due”. This would be less than 10% of your bill amount.
But just because you have the option, please don’t always pay the minimum amount due. This is a bad reflection on your credit score. Yes, when you pay anything lesser than the bill amount, it shows that you are not reliable when it comes to repaying debts. Hence stay wise and pay your entire bill amount.
Utilize your credit card as low as possible:
Credit utilization ratio must be low. This means that if you have a limit of 1 lakh, you must not spend more than 30% i.e. 30,000 of it. Keeping your expenses anything below this % is considered as a sign of a credit worthy person. Once you manage to lower the use of a credit card, the bank understands that you are not dependent on the credit card for all your expenses. This also means that your income is more than enough to handle your expenses. Hence when you go to apply for any loan, the Bank would notice this and approve your loan quickly.
Timely Payments on Credit Cards:
When you repay all your bills within the due date mentioned it shows you are a good and trustworthy person who can be trusted. But if you miss your payments 2 to 3 times, it might be a cause of concern as this completely affects your credit score. This is not good news and hence always be cautious with your credit card payments.
Will I get a personal loan at lowest interest rates if I follow the 3 rules above?
When you follow all the 3 points mentioned above, then your credit profile becomes very strong. The bank will look at your profile and understand that you are a good citizen that pays his/her bill on time and uses the credit card very wisely. This will be enough to not only get you an instant personal loan but also get it at the lowest interest rates available. The Bank might also waive off certain fees and penalties to ensure you take a loan from them.