Best Money-Saving Tips When Using a Credit Card
If you are a credit card holder who thinks their expenses have increased ever since you got that card, then this blog is just for you. No doubt credit cards have changed the way personal finances work. However, if not used wisely, it can not only bring down your credit score, it also increase your expenses in terms of charges.
If you wish to learn of ways on how you can save some money while using a credit card, continue to read further.
Top Proven Tips to Save Money on Your Credit Card
Choose your card wisely:
There are numerous credit cards available out there. Different types of cards offer different benefits to the user. To better understand what credit cards suits you the most, first try to understand your spending pattern. Analyze where you spend the most money and then pick a card so that it aligns with your spending pattern.
This will not only get you more discounts but also help you accumulate higher rewards for your spending. Say, for example, you do most of your shopping online. Now there are several cards that have partnered with different eCommerce platforms and if you use them to pay your bills, you get higher rewards.
Understand your card benefits and charges well in advance:
Every credit card company has their policy when it comes to repayments and charges. To avoid being penalized with late repayment charges or higher interest rates, make sure to understand these policies before getting yourself a credit card.
The same thing applies to your card benefits as well. If you know your reward system and benefits in advance, you can better plan your expenses.
Make payments using credit cards:
Your credit card company wants you to use their card more. Now you know why they reward you for your retail transactions when you use your credit card. The more transactions you make using your credit card, the higher the reward points you will accumulate. The rewards are even higher when you make any payment to their merchant partners. So next time when you decide to go on a shopping spree, remember to use your credit card.
Redeem your reward points:
Every time you use your credit card to make a payment, depending on your card policy you are rewarded for it. However, in the case of some cards, these accumulated points expire after a certain period. So to make the best use of your credit card, remember to exhaust your reward points before they go to waste.
Some examples of how you can redeem your reward points are:
- To get a discount on your next credit card bill
- To claim a discount on your next transaction
- Cash redemption or cashback
- In buying selected products from a catalog.
- To make hotel or flight bookings
- To claim gift cards or merchandise.
Make timely repayments:
Credit cards levy very high interest rates if you miss your due date for repayment. The last date to make your credit card payment for a particular bill is your due date.
Every time you miss this date, you will have to pay a hefty sum of money as interest and maybe a penalty as well. To avoid having to pay such charges, make it a habit to pay your credit card bills on time.
Credit score building:
Your CIBIL score reflects your creditworthiness. Even though it is not directly related to saving money, it still plays a very important role indirectly. Every time you repay your credit card bills on time, it improves your credit score. So if in case you ever chose to apply for a loan in the future, a good credit score shall make you eligible for loans at a much lower interest rate.
Avoid revolving your credit:
Most credit card companies allow you to revive your credit. For the unversed, when you pay your Minimum amount due (MAD) before your repayment due date and the remainder of it later on, it is known as credit revolving. Companies provide this facility to reduce your financial burden. However, the catch here is that it increases your expenses.
When you carry forward your bills, you are charged interest for the entire period your bill was due. So even though it allows you to repay your bill in parts, it increases your interest charges. Not to forget it also lowers your credit score.
Avoid cash withdrawals:
Even though credit cards allow easy cash withdrawals it comes with their own charges. Depending on your credit card company, withdrawals on credit cards range between 2.5-3%. It is called a cash advance fee. There are also interest and other regular charges levied on the amount used. To avoid paying such charges, try to make transactions directly using your credit card instead of withdrawing money from it.
FINAL WORDS
As easy credit cards have made our lives, using them without due care can totally blow up your personal budget. Hence, just choosing a good card won’t do. You might need to do some financial planning as well. Try to use your credit card wisely. It would not only help you avoid additional charges but also save some extra money on your transactions.