5 ways to make your credit card work for you

5 ways to make your credit card work for you

New Delhi: A credit card is a convenient way to handle a financial crunch. It especially comes in handy when you are in immediate need of money, but short of liquid cash. With Credit Cards, you have the option to buy now and pay later. A credit card can be a valuable tool if you know how to use it properly. However, using credit cards irresponsibly can also lead to big problems like a debt trap.

If you want to use credit in the right way, you need to adopt a few simple habits that will let you enjoy the benefits of credit cards such as cash flow flexibility and rewards perks without the dangerous downsides.

Here’s how you can make your credit card work for you:

1. Credit score: Your credit card can help you maintain a high credit score. In order to do that you need to use your credit card to buy only what you can afford and pay your bill in full every month. It is truly the only way to avoid getting into credit card debt and making sure your credit score stays high. Paying your bill in full, you should also make sure you pay your bill on time. Most issuers charge an ugly fee for late payment. And since a part of your credit score is based on your payment history, a missed payment can really ding your score.

2. Sticking to budget: If you’re disciplined enough, you can use a credit card as a complement to your budget. In case you have created a written monthly or yearly budget, you can use your credit card for purchases until you work through your predetermined spending limits. Not only is this great to help you stick to your budget but it is a great way to earn rewards for purchases you’d be making anyway, and to gain certain protections that only credit offers. To stay on track, make sure to log in to your account once per week or every few days. Seeing your spending on your computer screen is sometimes the only way to let how much you’ve really spent sink in.

3. Restrict yourself: With debit card payments being so easy, sometimes one can go overboard and spend more than they should. If you’re worried that you might overspend, you can ask your credit card company to lower your credit limit to something you know you can manage on a monthly basis. They should be more than happy to oblige since they ultimately want you to pay the money back on time. If you do not want the company to change the limit, you can use your card until you’ve spent a self-imposed limit and then put your card away in a drawer until the beginning of the next month – or until you pay your bill in full.

4. Rewards: People who master the art of taking advantage credit card rewards are the ones who know how to make their credit card work for them. The best rewards credit cards offer an array of benefits – including cash-back, hotel loyalty points, and frequent flyer miles — that can be earned just for using your card for regular expenses. Once you have used your card smartly and accumulated tons of reward points, the next step is to ensure that you redeem the reward points before they expire. A large number of credit card users do not track their reward points regularly, letting them expire. This is a failed opportunity. So, make sure to monitor your loyalty account periodically and use the reward points before they expire.

5. Extra perks:  Even if you’re not interested in credit card rewards, you can still leverage the benefits of a credit card. For example, some of the best credit cards out there offer perks such as free travel insurance, price protection, and extended warranties, exclusive discounts on e-commerce platforms, premium lounge access and more. Before choosing a credit card, make sure that you understand all its benefits and features. If you already own a card, visit the card issuer’s site to see all the rewards, loyalty points, and other offers on the credit card. This way you can sign-up for a card that can fuel other interests, wants or needs in life.