A credit card offers unlimited financial freedom. But as all freedom, a credit card too comes with its own set of responsibilities. If used responsibly, a credit card can be a very effective financial tool. Whether you are a first timer or not, people often tend to splurge which leads to a debt trap through random usage. Here are some credit card tips for smart users on how to use a credit card most effectively and efficiently without making it burden.

1. Pay off your balance every month

It is myth that carrying a balance on your credit card every month can benefit your credit score. No it does not. Infact, the interest rate increases and adds on to your burden. Ideally you should pay off your credit card every month without delay. Avoid the temptation to spend more than you can pay. If you want to have a good credit history then make small purchases and pay off the balance in full.

2. Use the card for needs, not wants

Remember your credit card is a temporary loan. So one of the most important credit card tips is to use it wisely only when you need it and not when you want to. For example, you can avoid using a credit for shopping for a LCD TV as it is a want but you can pay your hospital bill which is a need. This will not only help you to avoid the debt trap but you can avoid high interest charges as well.

3. Never skip a payment

Remember to settle your bill every month. Though paying off the full amount is the wisest thing to do but if you can’t, do settle the minimum payment before the due date to avoid heavy penalty and higher interest rate. It will also avoid a negative mark on your credit score.

4. Use the credit card as a budgeting tool

Not all are aware that credit card infact can be used as a budgeting tool and helps you control your budget. By making a list of credit card purchases every month, you can keep a tab on how much you spend every month. This will help you cut down on un-necessary expenses. You should make a budget for yourself and try not to overstep it. But remember before using it as a budgeting tool, you should have enough balance in your bank account to pay off the bill in the following month before the due date.

5. Use a rewards card

One of the best credit card tips is using it for rewards card. Use a card that offers rewards while making a purchase. Rewards like airline miles, cash discount on next use or retail points are things you should keep a watch on. Keep a watch on credit card offers!

6. Stay under 30% of your total credit limit

Credit rating is important because it is an important part of your finances. Keep your credit utilization ratio (percentage of total available credit that you are using) under 30% to maintain a healthy credit score. For example if you credit limit is Rs 10,000, then you should keep your balance under Rs 3000.

7. Protect yourself from credit card fraud

Though there are various mechanisms to check credit card frauds, but frauds still happen and you must know the types of credit frauds to protect yourself from one. Never disclose the PIN or CVV number to anyone to ensure security of the card – this is one of the most basic and important one.

8. Stay informed and up-to-date

Kepp yourself updated with the latest interest rates, policies and changes that are being implemented by the government financial bodies and how they will effect your credit card plan.  There are many things that credit card companies do not want you to know. So, the mantra is stay informed and stay up-to-date.

A credit card can be a very useful financial tool if used responsibly. Paying bills on time, avoiding over spending and not making purchases beyond need, can help you take control of the credit card rather than the credit card taking control of you.
Consumer VOICE experts compared credit cards on basis of credit card interest rates, best credit card deals and other parameters to list the best credit card. 

There are various types of credit cards when you apply for credit card and you are offered one based on your needs and repayment power. Before submitting your credit card application, understanding the credit card features will not only help you choose the best credit card but also enable you to use it wisely. One should be aware of the credit card services before applying for one.

• Alternative to cash

  Carrying a lot of cash is a cumbersome process. So, credit card is a good alternative to cash. It helps one to shop conveniently without having to carry cash of various denominations.

• Credit limit

  This is the most important credit card feature. Credit limit is the maximum amount you can charge on the card. So when you cross the limit, your creditor will charge an over limit fee. You can opt for a normal credit limit which is given by the bank at the time of issuing a credit card or for a revolving credit limit which varies with the financial exposure of the credit cardholder.

• APR

  APR or the annual percentage rate is the interest rate applied to balances carried beyond the grace period. Credit cards have different APRs for different types of balances, like balance transfers or purchases. Higher APRs are charged for balance transfers and cash advances.

• Regular charges

  These are the routine charges charged by the credit card company which include annual charges and additional charges like charges for an add-on card.

• Record keeping of all transactions

  Credit card companies keep a record of all your transactions and such a record helps the companies to raise appropriate billing amounts payable by their cardholders, either on a monthly or some periodic basis.

• Rewards points

  Not all credit cards offer rewards on purchases. Credit card perks differ from company to company and also on the type of card that you opt for.

• Grace period

  Grace period is referred to the minimum number of days a credit card holder is given to pay his or her credit card bill. This grace period does not involve any interest or charges but if you carried a balance from the previous month, you may not have a grace period for your new purchases.

• Higher fees for cash withdrawal

  Though all credit cards allow cash withdrawals but interest charges for cash withdrawals are higher than usual and no grace period is provided for cash transactions.

Credit card is important and essential but one needs to be cautious about its security. Take adequate precautions and protect yourself against any credit card fraud by knowing various types of credit card frauds. You must also know credit card tips for smart users.

Consumer VOICE experts compared credit cards on basis of credit card interest rates, best credit card deals and other parameters to list the best credit card.

Things credit card companies do not want you to know

Types of Credit Card Frauds

If you are a credit card owner there is a chance that you may be subject to credit card frauds like thousands of others around the world. Use of credit cards around the world has increased over the years. Online payments and electronic transfers have led to the increased use of credit cards over the years and with it, credit card frauds have also doubled. Though banks and payment industries have created new technologies like secured payment gateways and innovations to combat fraudsters, yet consumers are not informed of credit card frauds and how to protect themselves against it.

There are two main types of Frauds

Card- Not- Present (CNP) Frauds

The most common type of fraud is the Card Not Present fraud or CNP fraud. This occurs when the customer does not present the card physically to the customer or to any credit card machine but the card holder’s information is still stolen and used illegally. Card-not- present fraud can occur when a fraudster gets hold of a cardholder’s name, billing address, account number, three-digit security code and card expiration date which can be stolen electronically, without obtaining the physical card. Card not present fraud occurs online or over the phone. It may also be a result of phising emails sent by fraudsters to steal personal or financial information through an infected link.

Card-Present Frauds

This type of fraud takes place when the credit card is physically presented to the merchant during the transaction and takes the form of skimming. Once that data is used on credit card machines to make a purchase, the consumer’s account is charged. These frauds have relatively come down over the years and it is easier to detect because the merchant can match the signature and observe the behavior of the customer as well. Some of the signs that one can look for to identify possible card-present fraud are when a consumer purchases many items without caring about their price or style, when a consumer hurriedly rushes to complete the
transaction or making bulk purchases.

Apart from being cautious about credit card frauds, you must also know credit card tips for smart users so as to make it a more effective financial tool rather than a liability.

Some Other Ways of Credit Card Frauds

• Card Cloning : A common way of credit card fraud is card cloning with the use of
• Card Skimmer. This is a device that is used by criminals to record all the data on the card so that money can be siphoned off easily from the account. Fraudsters fit skimmers in ATM machines which scan all the data of the card and makes clones.
• Card Trapping: This happens when the card that you insert in the machine gets trapped and you retrieve it only later. Your card can be misused in the mean time.