Using a credit card is most easy. However managing it is also very important and many individuals do not use it prudently resulting in a bad credit score and getting a credit in the future may become difficult.
Here are some important tips on managing expenses and investing in credit cards:
1. Select wisely
Before opting for a credit card it is best to have thorough knowledge about its payment features, credit limit, interest rate, monthly billing cycle, interest free period, cash advance limit and charges, foreign transaction charges, etc. So selecting the right card is the first most important step towards building your credit score.
2. Ideally, you should have cards that allow you to earn reward points or get cashbacks on purchases, utility bill payments, travel miles, etc.
3. When you have extra money, take advantage of the billing cycle. This will allow you to make the most of the interest-free period.
4. Pay your bills on time and fully. Never pay in installments, even though the bank provides you with an option of minimum balance payment. This is a trick used by the card provider in order to later earn interest on the remaining balance.
5. Credit cards carry exorbitant late fees. To avoid them, make timely payments. Because your credit rating is closely linked to your payment history.
6. Be aware of the interest rate on the cards which is charged by the provider when user makes late or partial repayment. You should keep in mind that not everyone uses the same rate. Also, keep in mind that a default will affect your credit score.
7. Get a secure card, for both face-to-face and virtual procedures. Rising card thefts may wipe out your money, if used unethically by a fraudster.
8. Many times banks issue cards with special credits or discounts. You can apply or think about opting for one of these cards. But be careful and not to own too many cards. Owning multiple cards shows that an individual is credit hungry.
9. Ideally, you should know the features of your family’s credit cards or supplementary card. With this you can get additional credits.
10. Be careful about the number of credit cards you manage. The less you have, the better. Ideally a person should have one for regular expenses and one for emergency expenses.
11. Never over cross the credit limit as it carries extra charge and shows the credit hungry nature of the user.
12. Do not apply for a card at multiple lenders. In case of rejection, it gets reported to the credit bureaus.