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. 

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