Getting a credit card is a huge financial commitment. You need to know how to use it wisely and only use it to cover unexpected expenses. If you use a credit card irresponsibly, you will wind up in a long term debt and a huge interest will be accrued. The following are the steps to use your credit card wisely:
- Get a credit card:
If you are getting a credit card for the first time, then approach the bank where you have your savings account and learn about the offers and the interest they will be charging you. Then compare it with the features and benefits of other bank’s credit card.
- Credit card can be taken from a credit card company as well:
Bank is not the only place that offers credit cards.
- Credit card can be taken for a business:
Businesses of various kinds can issue their own credit cards. The interest rates a higher than that of credit card offered for individuals.
- Prove your financial responsible:
When you are applying for a credit card, you must make sure your credit history and credit score is high. Make sure you have cleared your debts on time and have no pending payments.
- If your credit history is short settle for a secured credit card:
If you have a shorter credit history, there is a good chance that you will be asked to take a secured credit card. It is usually issued against a fixed deposit. The banks will be comfortable giving you a credit card. The secured credit card can be later on converted to a normal one once you have shown that you can use the credit card responsibly.
- Make purchases responsibly:
You cannot spend over the limit on your card. If you are making purchases on your card, clear the balance out in a month. If you fail to do so, you will be charged heavy interest on the outstanding balance.
How to use your Credit Card responsibly
You can use your credit card responsibly by:
Building your credit history with small regular purchases. You must ensure that you are making small purchases and are clearing the balance at the end of each month.
- Keep the balance as low as possible. Though it seems like a good idea to make a huge credit and repay it on time, but, you will end up using a lot of your available credit and it will hurt your credit score and credit history.
- Don’t get too many cards at a time. Opening a lot of credit card accounts at the same time hurts your credit score.
- Keep your credit card information safe so that it is not used for unauthorised purposes.
- Don’t always fall for credit card offers. Don’t take up on an offer unless you really need it.
Additional features of Credit Cards
The credit cards can also be used for the following:
- To set up automatic deduction to paying bills.
- To avail rewards such as reduced annual fee, flyer miles, etc.
- Ask for a larger credit limit after you’ve used your credit card for some time.
- Get overdraft protection on your credit card.
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