Credit cards have become almost an unavoidable element when it comes to our personal monetary affairs. They are an easy way to manage our expenses even when we are running short of some money in the brief term. As of 2021, the volume of credit card and debit card payment transactions in Singapore surpassed 1.46 billion. The credit card usage continues to surge across the globe given its remarkable advantages. The ease of online shopping and bookings through your credit card coupled with various bank offers lure many people. However, excessive and unthoughtful utilization of your credit card can also become a source of stress. Credit card debts can get out of your control if you become reckless while using it. Thus, it is essential to follow some best practices that can ensure the smart use of your credit card and do not add to your debt obligations.
Top five practices for smart credit card usage
We have some tips for credit card use that even many financial experts swear by and will help you avoid huge credit card debts.
- Fix an appropriate credit limit for your credit card
Having a credit card can prove savvy to meet a variety of our spending needs. However, you cannot use it rashly and end up regretting later. Credit card providers offer customers the ability to set up their credit limit. It is always ideal to determine a card limit that is optimal and you can easily bear to repay it within the required time. Setting a credit threshold on the higher side just because your credit card provider is allowing it is not a wise move. You might feel lured to splurge much more than you actually need and may not afford to incur in the long run.
- Use spending analysis tools
If money management is not your forte, you can always take assistance from professionals. With modern expense management apps, you can analyse your expenditures including your credit card spendings with just a tap. According to your income and basic cost of living, you can budget your expenses that you can manage with your credit card. Spending analysis tools also give a clear picture of how much you have expended for various categories of costs in a given period using all your different credit cards. Such insights can help you cut back on unnecessary outlays and utilize your credit card more efficiently without resulting in any monetary problems.
- Leverage rewards and offers
Credit card companies usually come with some incredible price offers, discounts, and reward point schemes in collaboration with many noted brands. Many people often tend to miss out on checking out their rewards points and using them to grab some great deals. Many ecommerce platforms also come up with special discounts on payments made via credit card of specific merchants. Thus, you must keep an eye on great promo offers available with your credit card to ensure you derive all the possible benefits.
- Repay the due amount on time, as early as possible
You do not want to attract a huge credit card interest obligation along with your repayment liability. It is always desirable to use your credit card with the least possible charges. Thus, another best move to utilize your credit card smartly is to pay off your credit card dues in full every billing cycle. You must plan your expenses in a way that you do not take up on your plate more than what you can digest monetarily. Also never ever skip your payment as per the deadlines. It is always better to ignore the temptation to spend more than you can repay in a given month.
- Understand the correct utilization pattern for your credit card
There are certain dos and don’t that you must always remain vigilant about while using your credit card. You should avoid committing some reckless uses of the credit card as it can cost you dearly. Make certain that the bank enables the contactless payment option for your card after your approval and you utilize it cautiously. Do not share your credit card number or security codes with anybody, even if they are the posing as your banks representatives. Take special care while inputting your card details on online sites and applications as perpetrators might misuse such information. Always review the amount before swiping your credit card and entering the security PIN. Always try to clear your credit card dues by the end of the payment cycle. It is best to not carry forward the debt to the next cycle as the overall interest rates can be quite high. You must apply for an EMI facility if you are unable to pay your debt to avoid late payment charges and extra interest. Do not use credit card to make cash withdrawals frequently. You must go for such withdrawals only in extreme situations as banks can levy exorbitant interest on them. Using in rewards and credit card offers is great. However, you should not be driven with the motive of just earning more card rewards or discounts and overspend as a result. Plan you spendings wisely.
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Credit cards have become a key part of our financial transactions and it is ideal to utilize it while adopting expert approved tips. Just like how a credit card can help you in managing your costs, Tradition Credit’s loan facilities can also help you realize your financial goals. We offer a premier range of loan services to meet various monetary needs of our customers. As a licensed moneylender, we promise accountable and lawfully compliant offerings. Our finance professionals also regularly keep you updated with different financial and loan recommendations. Contact us now to get further details!