Credit cards have become one of the most convenient ways of managing payments. Access to a substantial line of credit at all times, time for repayment of the borrowed amount and attractive rewards are only some of the reasons behind the growing popularity of credit cards.
However, the manner one uses the credit card will have a significant impact on their credit history. Since credit history affects the borrowing potential of an individual, disciplined behaviour with credit cards is imperative.
Users, therefore, should maintain discipline while using credit cards and always make online credit card payments on time to avail financial advantages.
Some practices to ensure disciplined credit card usage
Prudence with credit card usage and timely online credit card payment can help in effective money management. Every credit card comes with a pre-set credit limit. However, as a responsible user, one must set their own spending limit depending upon their repayment capability. Impulse spending can lead to a lapse in repayments. Credit card users can also request the respective credit card company to reduce their limit to keep a check on the spending.
Furthermore, to avoid credit misuse and debt accumulation, the following steps can be followed.
- Pay bills on time
It is essential to pay the bills on time regularly. It is always better to pay the bills before the due date arrives. If the bills are not paid on time, then a penalty rate can be implied on the outstanding balance, which can increase the overall due amount substantially.This is one of the most common reasons of debt accumulation amongst credit card users.
- Use the grace period prudently
All credit cards come with a grace period to repay the bills. This period generally extends up to 50 days from the day of statement generation. Paying the outstanding bills through online credit card payment on or before the due date allows the cardholder to repay the outstanding debt without paying any interest. This is one of the effective ways to use a credit card wisely.
- Try not to use credit cards to withdraw cash
Credit cards should not be used like debit cards to withdraw cash from ATMs unless emergency financial requirements arrive.
ATM transactions attract a flat transaction fee which a cardholder has to pay. Also, only the most reputed financial institutions, like Bajaj Finserv, offer an interest-free period against transactions. All these factors can collectively cause the user to pay back hefty amounts.
- Credit utilisation ratio must be kept under control
It is essential to keep credit utilisation under 30% at all times to indicate sensible usage of the available line of credit. It also helps build a good credit score over time.
Therefore, even if a user pays the debt back in time through online credit card payment, high credit utilisation indicates a risky borrower, hence is considered improper credit behaviour.
- Keeping a regular check on the bills
A careful analysis of the monthly credit card statements helps to understand and keep track of one’s usage, expenses, and spending pattern. A monthly statement includes every detail like credit card charges, offers, reward points discounts and other important details. This will ensure the users stay informed about their own transactions and other credit details. Also, a regular check will ensure that no unauthorised transactions took place on one’s credit account.
Apart from these factors, there are some other points that the users must strictly be aware of to ensure positive credit behaviour and improve credit score.
Users must read all charges thoroughly
All credit cards levy certain fees and charges upon the users. The general structure of the charges includes:
- Annual fee
- Joining fee and
- Late payment fee
However, the rate of such charges can vary amongst different financial institutions. Therefore, users must always compare the charges between institutions and be careful about the terms and conditions. It is always better for users to opt for cards that come with transparent charges, like Bajaj Finserv RBL Bank SuperCard. Users can easily apply for this credit card online.
Along with a transparent policy, one can also benefit from pre-approved offers provided for existing customers, which simplify the application process and helps save time. You can check your pre-approved offers by simply sharing your name and contact details.
Utilising the following steps can thus ensure positive credit behaviour, which will help the user to manage their finances and maintain a healthy credit history.
