Credit card tips for smart users

Credit card tips for smart users

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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. 

Related

Credit Card Features

Credit Card Features

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...

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Credit Card Features

Credit Card Features

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.

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Credit Card Features

Credit Card Features

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...

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Things credit card companies do not want you to know

Things credit card companies do not want you to know

Things credit card companies do not want you to know

Credit Card Companies

You and your credit card are inseparable. Right from paying for your groceries, to your child’s school fees or for your movie tickets or flight bookings, credit cards are no longer a status symbol but a necessity. As a result we have enslaved ourselves with the credit card. But there are things credit card companies don’t want you to know. But the fact is you are the boss of the credit card issuer and not the other way around. And to top it all, if you have a good credit score, you are in control of your credit destiny. Credit card features like APR, credit card payment, and credit card offers should be clear before you opt for the best credit card.

  • EVERYTHING IS NEGOTIABLE

When applying for a credit card you can actually negotiate for a lower APR or annual percentage rate. One can also adjust our due date depending upon your cash flow. Though it is in the hands of the credit card company to give you a lower APR, but you can always ask for one as these days the market is very competitive and the customer is the boss.

  • FIXED RATE ISN’T REALLY FIXED

This is actually fine print which we often tend to miss. Issuers can raise your APR whenever they choose. You should be notified about the increase in interest rate but ensure that you receive your mails on time and remember to check them regularly.

  • YOUR APR CAN BE RAISED IF YOU ARE LATE ON ANY BILL NOT ONLY ON CREDIT CARD BILL

Don’t forget that your credit card company monitors your credit report regularly and if you are late on any bill or faltered on any payment, your APR will be increased.

  • CASH ADVANCES ARE NOT WORTH IT

You are sometimes lured by credit card companies that you can take cash advances but what they might not reveal that APR for a cash advance is usually very high. Cash advances often lead to debt and then the issuer makes interest off your balance for a very long time.

  • PAYING OFF EARLY WILL NOT HARM YOUR CREDIT SCORE

The thumb rule is paying off your balance on time and f possible early. Pay off your due on the same day or at the end of every month whichever is convenient, so that you can keep a track of your transactions and balance in our savings account.

  • MINIMUM PAYMENT IS NOT FOR YOUR BENEFIT

The minimum payment is to the benefit of the company and not yours. This is the worst secret never disclosed to you. The longer you stay in debt, the more interest credit card companies can charge, and the more money they make. The companies make the maximum profit out of these low payments.

  • YOUR REWARDS PROGRAM CAN CHANGE ANYTIME

You are at times lured to a particular credit card company because of the attractive credit card offers. But these programs may change anytime and the fine is often confusing to analyse. Moreover, these reward programs might not benefit you in the long run.

You must also know the types of credit card frauds and credit card tips for smart users in order to use credit card to best of your advantage,

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. 

Types of Credit Card Frauds

Types of Credit Card Frauds

Types of Credit Card Frauds

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.

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

Related

Credit Card Features

Credit Card Features

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...

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