5 Golden Rules to Extract Maximum Value Swiping Your Credit Card
Ever since the advent of Credit Cards, a new era of convenience and payment flexibility has dawned upon us. Gone are the days where we had to carry bulky wallets full of cash to make purchases. Carrying cash was not only risky but also never fetched you the additional value back offers, as is the case with plastic money!
Credit Cards offer you great discounts, reward points, and gifts.
While Credit Cards used to be once a rich person’s entitlement, today, they are accessible by one and all. Whether it's paying for a dinner at a restaurant or buying the latest gizmos at your nearest electronic store; Credit Cards are undoubtedly the most convenient way to make purchases today. But the question is, do you know how to use a Credit Card to its full potential? In that light, if you're a new Credit Card customer or an existing customer who's looking to derive maximum benefits from your Card, here are a few tips that can help you use your card smartly.
But before we get started on the tips, we have listed a couple of pointers you should know about Credit Cards which will help avoid any confusion in the long run.
- Before you start using a Credit Card, it pays to understand all terms and conditions or at least the most important details such as your credit limit, late payment fees, interest rates, and other pricing details. In case your card came with a promotional rate, then try to figure out when the promotional period expires.
- When you start using your Credit Card, you will receive a monthly statement which lists out all the purchase you made within that period. You are usually given a time frame of 20 days or thereabouts to make the payment once the bill is generated. If you fail to make the payment or make only a part payment within the stipulated period, you will be charged a high rate of interest on the amount which is pending. Don’t let that happen.
Making the most of your Credit Card
Now that we’ve got that out of the way, let’s dive right in how you can make most of your card.
- Pay your bills on time
We have already mentioned above the reason why you should make your payments on time lest you want to be burdened with heavy interest charges. In the same regard, don't be tricked into simply making minimum payments. By simply paying the minimum amount due, don't think you will be able to escape interest charges as you will still end up paying an exorbitant interest rate on your outstanding balances. Always make it a point to clear your balance in full every month if you want to make the most of using your Credit Card.
Moreover, clearing your Credit Card bills on a timely basis has other advantages as well. Paying your dues regularly and avoiding any defaults can slowly help you build up a good credit rating which, in turn, opens you up to better financial possibilities in the long run. A good Credit Score paves the way for easier loan approvals, lower interest rates, increase in your spending limit, and also better Credit Cards.
- Make the most of your billing cycle
This is an often underrated but important part of the Credit Card billing process. You must understand your Credit Card's billing cycle. The reason behind this is that if you have an understanding when the actual cycle of your Credit Card begins and ends, you will be able to time your purchases better. Every Credit Card has its own billing cycle, and the way a Credit Card works is that you don't actually pay for your purchases immediately when you make the payment using your card.
You only pay for it when your statement arrives at the end of your billing cycle. That is: if you have long been planning to make a purchase, say for a swanky cell phone but lack funds for the same, you can time your purchase and avail the maximum free credit days with the help of your card.
Every Credit Card has a grace period which is the period between you making the purchase and the end of the billing cycle. In most cases, a time frame of 20 days is given for you to clear the payment in full before interest gets applied on your account. However, if you time the purchase on the first day of your billing cycle, you can easily maximise your interest-free grace period and enjoy nearly 50 days of credit (30 days + additional 20). That leaves you enough time to arrange the necessary funds and clear the payment.
- Know your rewards
One of the best features of using Credit Cards is the numerous rewards it bestows upon the user. To that end, before applying for a Credit Card, you should keep an eye out for the rewards program on offer. You should also get to understand how reward programs for the card you hold. While in most cases, rewards start accumulating as soon as you start swiping your card, at other times, you might need to register yourself before you can start earning rewards. Rewards can open you up for a lot of offers including free lounge access, discounts on products, cash backs, movie vouchers, and lots more.
For instance, SBI Credit Cards allow you to earn rewards points on purchases which can be redeemed for an array of exciting gifts ranging from Bose Soundtouch music systems to Baskin Robbins and Westside shopping vouchers. While you're at it, also keep a keen eye out for sign-up bonuses. Many Credit Cards reward new applicants with additional points as a sign-up bonus. Furthermore, also watch out for joining and renewal fees and ideally look for a card which has zero annual fees to maximise your benefits.
- Never use the cash advance feature
As far as possible, you should completely avoid withdrawing cash against your card unless you're left with no choice. The minute you withdraw from a Credit Card, you're liable to pay not only hefty cash withdrawal fees but you also won't be eligible to enjoy the interest-free period either as interest starts accruing immediately after making a withdrawal.
- Exercise caution
While Credit Cards come with their own set of advantages, you should also be aware of the various pitfalls. Ensure that you keep your Credit Card details such as your 16-digit Credit Card number, expiry date, and CVV details secure and confidential at all times. Similarly, avoid swiping your card at untrusted merchants or retailers as it can increase the chances of your card being misused.
The Bottom Line
Always be prudent while using your Credit Card as there are chances of things going south if you aren’t careful. By being diligent and following the tips mentioned in this blog, you can gain maximum traction while swiping your Credit Card.