Credit Card: Credit card changing digital financeing ecosystem has become a common need. They provide immediate purchase facilities to consumers, in which payment can be made later in lump sum or installments. Although experts believe that the indisciplinary use of credit cards can push consumers into debt trap, especially when they have more than one card.
In such a situation, the question arises that how the credit card should be managed in a smart way so that the benefits can also be avoided and the risk can also be avoided? Let’s know 8 important tips.
1. Choose credit card according to the requirement
Credit card companies are offering different types of cards today- some get reward points, some cashback or travel benefits. Experts suggest that consumers should choose the card according to their expenses habits.
2. Pay the full bill, not just the minimum amount
Only paying the ‘minimum amount’ of the credit card bill increases interest and it can begin to get caught in the debt trap. It would be better that you pay the entire outstanding outstanding every month. This can not only avoid interest, but also keeps the credit score strong.
3. Keep an eye on the date of payment
If you have more than one card, it can be difficult to remember the date date of each card. According to the Financial Advisor, the consumers cover the payment dates of all their cards in a week or set an auto-debit, so that there is no mistake.
4. Keep strict control at expenditure
Uncontrolled expenses are the biggest cause of default. With the help of Financial Management Apps, it has become easier to track the expenses being incurred through the card. With this, consumers can know how much is being spent on which card and where it can be cut.
5. Adopt Automatic Payment System
Auto debit system is an effective remedy for financial discipline. This causes payment on time and late fees or interest can be avoided.
6. Avoid using full credit limit
Using 100% of credit limit can be risky. This not only increases the risk of default, but it also affects your credit score. Credit utilization ratio is considered ideal to have less than 30%.
7. Keep Emergency Fund ready
An emergency fund is necessary to deal with any financial emergency. This reduces dependence on credit card and does not require sudden loans.
8. Withdrawal of cash from credit card expensive
Withdrawing money from ATMs with credit card is technically easy, but the interest and fees on it are quite high. You should avoid using this facility as much as possible.
Also read: Explainer: Home, Car, Gold, Personal … How many types of loans are there, what is the difference between them?
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