A cashless economy where all financial transactions are done digitally is the stepping stone to the government’s Digital India vision. Digital payment includes card payments, net banking, UPI payment, and more under its umbrella.

Plastic money is in vogue as India is advancing rapidly with the aim of a cashless society in vision, where paper currency will be almost entirely replaced with digital payments. 

Today we are focusing on credit cards.

If you are a proud owner of your first credit card, there are a few essential tips that can help you stay out of a debt spiral on your credit card.  A cardholder can make a credit card payment online, adding to the ease of use it offers. 

Use your credit card as a zero-cost means of borrowing by managing your card right with these tips. 

Top 10 Tips for Credit Cards Management

  • Keep the PIN secure

One cannot make a payment using a credit card without its PIN. A credit card PIN is like a password, hence it must be kept secure. Do not share the credit card PIN with anyone to avoid compromising its safety. Avoid the habit of noting the PIN and keeping it along with the card. If the card gets stolen, it will give ready access to the PIN also. Additionally, keep a PIN easy to recall, but not too obvious, like birthdays or anniversaries. 

  • Check the billing statement

Credit card statements are monthly bills that detail all the transactions that have been made in the last billing cycle using the credit card. Do not be careless with these statements and check them to ensure that every expense charged in the statement was made and is not an unauthorised payment or billing error.

  • Avoid using the card for whims: Use credit cards for necessary expenses and not on reckless wants. Using a credit card on whims can lead to large unpaid amounts on the card, giving way to interest and debts on the bill. Do not be frivolous with a credit card. Always remember you will ultimately have to pay for whatever you buy using a credit card, so use it only when needed.
  • Avoid late payments: Credit cards can be a costly affair for people who do not pay their bills on time. Late payments on a credit card lead to several issues like:

– Late payment fee: Card-issuing companies charge a late payment fee on delayed card payments and interest is charged on the entire due amount.

– Higher interest rate: A cardholder with a pattern of late payments often has to pay an increased interest rate. The bank might also cut down the credit limit on the card or even cancel the card in certain cases.

– Damaged credit rating: Late payments damage the credit rating. This can be a hinge in getting loans or other cards.

  • Limit the credit utilisation ratio: To maintain a healthy credit score, keep the credit utilisation ratio under 30%. The credit utilisation ratio is the percentage of credit the cardholder is using from the available credit limit. This ratio is calculated for the sum of credit available on all the cards. If the ratio exceeds 30%, try to pay the bill at the earliest to bring down the ratio.
  • Pay more than minimum: Card issuers see making only the minimum payments as an indicator of financial stress. Paying only the minimum amount adds to the cost in the long term. It also increases the interest payments every month. Paying more than the minimum amount assures the card issuer of the cardholder’s willingness and ability to clear off the bills. It is best to pay the bills in full for every billing cycle to keep debts at bay. 
  • Redeem rewards and use the perks: Credit cards are loaded with rewards and perks. The rewards can be in the form of travel rewards, cash back, rewards points, etc. These reward points are redeemable at hotels, shopping stores, online shopping websites, and while buying gift cards. It is best to find out about these perks and rewards and keep a check on the expiry dates of these rewards.
  • Get the mobile app: Download the mobile app for the credit card to stay updated about information like available credit and payment due date. Payment information is updated in real-time on these mobile apps, so if there is a wrong billing on the card, the cardholder will get instantly notified. 
  • Avoid ATM withdrawals: Credit cards come with a facility for withdrawing money at ATMs. However, cardholders should avoid using this facility unless it is an emergency as ATM withdrawals from credit cards attract higher fees. Using cards to make online or PoS payments is the better way of using them.
  • Keep unused credit cards open: Keep unused old credit cards open as it helps create a strong credit history. This may not be possible by using only a new credit card on which one has made only a few payments.

With the variety of credit card variants and card issuers available, it is a great idea to compare credit cards India to zero down to the most suitable option. Manage your credit card intelligently and avoid the interests and debts on it.

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