In today’s world, a credit card is no longer just a means of payment but has become a financial tool. People are increasingly using credit cards for online shopping, travel bookings, and everyday expenses. It offers benefits like cashback, reward points, and discounts. However, using it without proper knowledge can also lead to financial problems. Financial experts believe that if used wisely, a credit card can also help strengthen your credit score.
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Choose a credit card according to your needs
When choosing a credit card, it’s essential to first understand your spending habits. If you travel frequently, cards with travel benefits are better, while cashback cards might be more beneficial for those who shop a lot. Choosing the wrong card can result in fewer benefits and higher charges. Many types of cards are available in the market today, so choosing the right one can strengthen your financial plan.
Use reward points and offers smartly
Many people earn reward points but fail to use them at the right time. As a result, the points expire. Therefore, it’s important to regularly track offers and points through your card app or statement. However, experts advise that spending excessively just to earn points can be detrimental.
Use your credit limit wisely
Using your entire credit limit is not considered good for your financial profile. Generally, it’s considered best to keep your credit utilization below 30 percent; this helps maintain a strong credit score.
If you use a large portion of your limit, lenders may consider you a high-risk customer. Therefore, it’s crucial to keep your spending within the limit.
Paying your credit card bill on time is essential
Paying your credit card bill on time is considered the most important rule. If you pay the full amount on time, you don’t have to pay interest because there is usually an interest-free period of 20 to 50 days.
However, if you only pay the minimum due, high interest may be charged on the remaining amount, which can quickly increase your expenses. It also affects your credit score.
Understand the EMI option before using it
Credit card EMIs can sometimes make large expenses more manageable, but not all EMIs are beneficial. In many cases, the interest rate is high. In India, credit card interest rates can be as high as 30 to 50 percent annually, which can prove expensive in the long run. Therefore, understand the interest rate and processing fees before choosing an EMI option.
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Keep these things in mind when using a credit card
Regularly tracking your spending, setting payment reminders, and reviewing your statements can save you from financial mistakes. Many experts also advise that timely payments and responsible usage strengthen your credit score.
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Rohit P
My name is Rohit Pal, and I have been working in the field of journalism for the past five years. During this time, I have written on a variety of topics, including business, automobiles, technology, and politics. I have worked with several major organizations and am currently working with Timesbull.
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