This is the era of digital payments and credit cards have become a requirement in everyone’s life. Credit cards are one of the most used payment methods all around the world. Despite the fact that digital payments have taken a significant market share, credit cards continue to reign supreme.

Credit cards allow you to take a break from your monthly financial flow. They enable you to fulfill any unexpected needs that may develop during the course of a month. They also provide numerous incentives and discounts for using them.

• Credit cards are convenient to carry and use
• The majority of merchants in the country accept credit cards
• Credit card reward programs are an important consideration when selecting a credit card
• They offer numerous rewards and benefits 
• There are tons of credit cards to choose from, depending on your lifestyle requirements 

How to make the best use of credit cards? 

Carrying cash is no longer necessary in our daily lives as all sectors of business become computerized. Carrying a credit card is also far safer than carrying cash. There is less danger of the card being misused because it is password protected. You may make all of your purchases by simply swiping your card. A credit card allows you to make a variety of purchases with ease and pay them off later without incurring interest, as long as the terms and conditions are met.

Credit cards, on the other hand, can become debt traps if not handled properly. You may become enamored with your credit limit and spend more than you can afford to repay the next month. This leads to payment defaults and interest accruals, which can quickly balloon into massive debt in a matter of months.

To avoid such bad situations, we should use credit cards responsibly and budget our payments carefully.

1. Watch your credit utilization ratio:

Experts suggest that your credit utilization ratio should be maintained below 30% to 50%. This is a healthy level and lets you manage your credit card debt comfortably. Maintaining large balances on all of your credit cards might have a negative impact on your credit score. Additionally, if these high amounts are carried over from month to month, your interest expense rises. As a result, strive to maintain your credit utilization percentage to a minimum.

2. Pay your bills on time:

Be aware of your billing cycle and billing dates. Avoid making late payments or defaulting on payments. Credit cards carry one of the highest interest rates. If you don’t pay off your bill on time, interest accumulates and your payment amount grows. And if you default or skip a payment, you will not only be penalized, but your credit score will suffer as well. So ensure to pay your bills on time if you don’t want your interest outflow to rise and your credit score to fall. Set a reminder, make a note of it on your calendar, or just set up recurring payments.

3. Don’t stick to paying just the minimum amount:

Paying just the minimum amount due is not enough as it will result in interest charges. This is a very bad debt management practice that will accrue a high very high debt on your credit card. You must pay your account on time to avoid charges. However, in order to avoid high interest rates, you must also pay the amount in full. Pay little heed to the minimum dues, and make it a point to pay off your entire credit card debt each month.

4. Never withdraw money from an ATM using your credit card:

Unless absolutely necessary, avoid withdrawing cash using your credit card. This carries one of the highest charges. A cash advance fee, which is often a percentage of the withdrawn amount, is levied every time a credit card is used to withdraw cash. As a credit card cash advance fee, banks typically charge 2.5% to 3% of the withdrawn amount, with a minimum of Rs.300 to Rs.500.

5. Check the joining fees and annual fees:

Joining and renewing fees are common on credit cards. Pay special attention to the cost structure and only select a card with fees that are acceptable in contrast to the benefits it provides. If you spend more than a particular amount per year on your credit card, you may be eligible for a fee refund. You can save money on annual fees by using such benefits.

6. Make the most of your rewards program:

Many credit cards have incentives or reward programs for new members. These incentives or rewards can be redeemed for gift cards, free airport lounge access, and so on. Make the most of your credit card by redeeming your reward points on time. Many cards even allow you to redeem the reward points for cash back on your card. That can be a good option too. Fuel cards are very beneficial for vehicle owners whose credit card bill has a considerable portion for fuel. So choose a card that can give you the most rewards for your usage. 

Conclusion

One of the easiest methods to pay for your purchases, whether at your neighborhood shop or online is with a credit card. If you use it correctly, you can benefit from interest-free credit, numerous prizes, and cash-free living. Credit cards win out over debit cards because of the reward points and the simplicity with which they may be used to perform purchases even when money is tight. Take the time to learn about the fees, interest rates, penalties, and reward system associated with your card. Lastly, before you sign on that card application, make sure you compare different cards online and determine the ideal card that matches your lifestyle.