FINANCE | 5 Smart tips to use ‘Credit Cards’ wisely


By Deepali Sharma

Most of the people think that a credit card allows them to borrow money from their bank/financial entity to make purchases, but they don't realize the fact that this small plastic card can be used to save money as well. When you start using your credit card on the basis of the benefits it offers and smart tips, saving money will not be that difficult. Ideally, you should choose a credit card as per your needs to save money.

Your credit card is responsible for improving your credit score, but on the flipside, if you are not careful, it can also drop your credit score. Think smart and use your credit cards to your advantage. So, if you are looking to use your credit card wisely, have a look at these tips.

#1. Understand Your Credit Card

Before you choose a credit card for yourself, doing some basic groundwork will only prove beneficial. Let us assume, utility bill payment is the major component of your monthly expenditure, then you should go for a card offering you attractive cashback offers on utility bill payments. In this case, going for a credit card offering air miles or reward points on every spend won't make any sense.

If you travel frequently by air, then choose a co-branded card offering you air miles, which can further get you a free air ticket as well. When you get a new credit card, take some time out to get acquainted with its terms and conditions. This will help you to use your card wisely. If you have been using a credit card for quite a while now but you are not well-versed with the terms and conditions, then it's never too late to ask for a copy of the terms and conditions from your bank. Moreover, this will also help you to understand the reward point policy.

#2. Request For An Increase In Credit Limit

So, seeing the higher credit limit, you have purchased the most recent credit cards. But, if at a later stage, you are interested in closing some of your cards and you know closing your recent cards makes more sense, you have a dilemma. Usually, most recent cards tend to have a high credit limit. So, what do you do?

In such as case, if you have a good repayment record, you can have a word with your bank to negotiate the credit limit, especially when you are an old customer of the bank. In most of the cases, the banks will oblige and you can choose the credit cards you want to close.

#3. Avoid Accumulating Credit Cards

Even if you are getting credit cards for free, make sure you avoid the temptation of having them. Even if you don't transact, there is always a risk of losing or getting stolen. Therefore, it is advisable to keep a maximum of two credit cards only. The key purpose of having a credit card is the ease of single payment mechanism, which easily gets defeated when you have multiple cards.

Moreover, when you have multiple credit cards, you will have to invest more time and energy to maintain them. There is always a risk of missing out payments of one of the credit cards as well. And with too many cards you will also be tempted to spend on worthless things. Ideally, you should go for one all-purpose credit card.

#4. Rotate Usage Of Multiple Cards

In case you have multiple credit cards, then make sure you use them for different expenses instead of using the only card for most of your purchases. Ideally, you should use each credit card once in six months. Some credit card companies may even close your account if they feel you are not using your credit card regularly. In this case, it will negatively affect your credit score. Therefore, to be on a safer side, make sure you use your credit cards time to time.

#5. Understand The Reward Points

When you make purchases using your credit card, you get to earn reward points. The whole concept of reward points looks enticing but, before you redeem your reward points, it is important you have checked the reward point catalogue on the official website of your bank. You need to decide what you want in advance and therefore plan redemption of reward points when you have accumulated enough.

Further, these reward points can be redeemed for different items, gift cards, merchandise, gifts, etc. While most of the people invest most of their time gaining knowledge of different saving opportunities, but there are some people who delay credit card payments, but this can be avoided by using modern technology wisely.

(Deepali is a freelance writer. She is an expert in inbound marketing, content marketing, and lead generation)