Finance

Tips & Tricks One Must Know Before Using A Credit Card

According to reports published by the Reserve Bank of India in February 2019, there are approximately 46.1 million credit cardholders in India. Since February 2018, the growth in the number of active credit cards has been recorded at 9.8 Million.

Consequently, the number of transactions using credit card at point-of-sale has increased by 23.2% within the same period. The improved credit infrastructure and greater transparency of financial institutions regarding credit facilities have significantly impacted credit card usage in India. On top of that, credit cards offer multiple benefits such as fuel surcharge waiver, reward points, airport lounge access, etc. When you use a credit card, it also builds your credit score and allows you to easily avail loans in the future.

Nonetheless, in case you are availing a credit card for the first time, you need to consider a few factors which will ensure proper usage and maximum benefits from it.

Tips To Know Before Using A Credit Card

When you are using a credit card, there are certain elements that can contribute towards an improved credit score, if followed properly. Otherwise, it can lead to a low credit score which will represent you as a poor borrower and discourage lending institutions from advancing credit facilities to you in the future.

The tips you should know before you apply for a credit card online are –

  1. Consider setting a budget

The prospect of a credit card is exciting as it allows you to make big purchases and earn rewards in return. Regardless of that, you should consider fixing a routine of expenses you will make through your online credit card every month. It will not only allow you to streamline your monthly expenditures but also facilitate balancing your expenses with your monthly income. Thereby, you can easily pay off dues in full every month, which will enhance your credit score.

  1. Track your purchases

Once you have designed a budget, you should start checking the purchases you make through your credit card to ensure you are in line with it. You can easily track the same with the use of a credit card app. These apps offer a detailed view of your credit card expenditure along with your monthly limit.

  1. Enable automatic payments

When you are availing a credit card, ensure you enable the automatic payments option by linking your savings account with it. It will ensure you pay off your monthly bills on the due date. Timely payments ensure you do not have to incur any late fees or interest on the outstanding amount.

Also, your credit score is likely to improve by a significant margin when your credit history shows timely payments in full. The continuation of this habit builds substantial credit history.

  1. Repay in full

Although lenders provide the option to pay a minimum amount to avoid late fees, if you build the habit of minimum payments it will accumulate large debt over time. Subsequently, it will also affect your credit score. Henceforth, try to pay in full every month to avoid debt.

  1. Do not exhaust credit limit

You should not use your entire credit limit, especially not regularly. It will affect your credit score and reflect you as credit hungry individual to lenders. Ideally, you should use less than 30% of your credit limit. Prepare your budget in a fashion wherein such a limit is not crossed.

  1. Regularly check statements

You should check your credit card statements regularly to note how you are performing as a borrower. You can check it through your respective lender’s credit card app.

Regardless, if you incur a large credit card debt, you can consolidate it by availing a loan. You can apply for a loan through loan apps such as Bajaj Finserv App – Experia.

Such financial institutions also provide pre-approved offers on credits which make the procedure for availing a loan faster and simpler. These offers are applicable on a wide variety of loans such as home loans, personal loans, loan against property, etc. You can check your pre-approved offer by sharing only your name and phone number.

Nonetheless, a credit card is an excellent financial product to facilitate large expenses, earn rewards, and also build a considerable credit score. Follow these steps diligently to build good lending habits and an impeccable credit score.

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