Best Way to Use My New Credit Card ?

In today’s date, credit cards are quite essential. They not only make transactions smoother and more convenient but also offer the holder many rewards for using them. However, used unwisely this small piece of plastic can ruin the financial future of a person too. This is because a credit card – with the high credit limit that it reflects in general - can wrongly give the user an idea of being competent to afford purchases which he/she is actually not. And so, it can make things go awry than ever when the control is lost. 

 So here are some tips to avoid recklessness in card usage and use your new credit card smartly and wisely.

Understand the concept of ‘credit’ in your card

For a new plastic user, understanding the concept of ‘credit’ is important before embarking on the usage of a credit card. Your card is actually your route to an unsecured loan, which the bank provides you for your purchases. You will be required to pay it back at the end of the billing cycle, failing which, the financial implications that you will be inviting in the form of interest/penalty on your card will be catastrophic. Debt will start to accumulate heavily and the same will be damagingly reflected in your CIBIL score or Credit report.

Plan your purchase

This is important since you need to make smart decisions about buying things that you actually ‘need’ in your life, rather than just ‘want’. To use credit cards wisely –

• Do not use your card to buy everyday items like food, apparel and groceries.
• Plan your purchase before hitting a store so that you can avoid impulse shopping.
• Make purchases on your card that are influenced by automatic limit, like car fuel or your gym membership charges.

Pay your card bill in full

Paying the minimum on your card is possible at the end of every billing cycle but that’s not recommended. In actuality it just prolongs the amount of time you require to pay your debts off. In the process it also inflates the interest that you pay up every month. So yes, you need to pay off your bill in full every month to stop your card from becoming expensive.

If you can’t do this for any particular month, remember to keep your card away and not use it until you have paid off the outstanding dues in full.

Do not use your full credit limit

However big a credit limit your card flaunts, you must never use more than 30% of it. Your credit score depends a lot on the volume of debt that you are having. So, having a low debt amount here can help you nurture an excellent credit score. Low amount of debt is also easier to handle and repay than something bigger.

Last, but not the least, weigh up the interest rate offered in your card at regular intervals with current offers to be confident that your card is a good pick. Since it is the sole determinant of how much you shell out to carry forward a balance on your card, it should be low. If your bank is not ready to negotiate, for a friendlier rate on credit card apply online.