Credit card usage is at an all-time high according to a third-quarter report from TransUnion in 2018. People in India operate around 3.69 Crore credit card accounts with a combined debt of more than Rs. 84,000 Crore.
The data implies that more individuals are opting for such cards every day. If you are about to avail your first credit card, you should keep a few things in mind to enjoy its features and benefits to the fullest.
6 Credit Card Tips for first-time users
- Be specific while choosing the card
Credit card issuers offer a varied range, even on each of the multiple cards they offer. Every group of features serves a different purpose and is suitable for different people.
Before searching for the perfect first credit card, you need to assess what your requirements are from such a card. For instance, if you frequently shop online, you should look for a card that offers attractive offers on purchases made through e-commerce websites.
Similarly, if you travel a lot, some cards offer a discount on flight tickets. Choosing the right credit card for yourself is vital to ensure the best experience.
- Do not spend more than you can afford
When you opt for a credit card, the financing company will offer a credit limit for the card. For example, based on your income and credit rating, an NBFC may offer Rs. 2 Lakh as your credit card limit.
However, just because you can spend Rs. 2 Lakh with the card, does not mean that you should. You should check the use of a credit card carefully. It is advisable to stick to a certain percentage of the available credit limit to pay the subsequent outstanding amounts as per each monthly statement.
- Pay credit card bills every month
Paying off credit card bills every month is crucial. Moreover, you must clear this payment within the due date. Late or partial payments can not only attract more interest but also negatively affect your credit rating.
You can take advantage of one of the many convenient options to pay your credit card bills, such as internet banking. Make sure to pay the maximum outstanding amount as mentioned with each bill.
- Enquire about reward points
Many people are unaware of the importance of reward points while using their first credit cards. Reward points are points that you can accumulate during the course of credit card usage. You can then redeem these points to avail discounts, cashbacks and other interesting offers on your expenses.
Some cards, like the Bajaj Finserv RBL Bank SuperCard, offer substantial reward points upon availing the card itself. Redeeming these points can save you a huge deal of money every year.
- Avoid withdrawing cash with credit cards
If you require cash for some reason, never use a credit card at an ATM to withdraw the amount. Financing companies charge a great deal of interest on cash withdrawal through credit cards. It is safer and more profitable to use your debit cards for any cash requirements instead.
- Break your outstanding balance into EMIs
If your debt is considerable and paying the entire sum at once is proving too difficult, you can speak to your credit card issuer to break down the due into smaller monthly instalments.
Many credit card companies offer this feature to customers to enhance the convenience of making purchases. The Bajaj Finserv RBL Bank offers easy EMI conversions of purchases as well as numerous other features and benefits.
Bajaj Finserv additionally provides pre-approved offers to make availing credit cards simpler and quicker. These offers are also available on unsecured loans, such as personal loans, business loans, and secured credit, like home loans.
You can easily check your pre-approved offers by providing your phone number and name.
Lastly, after availing your first credit card, make sure you do not exhaust more than 40% of the credit limit for the card. If you want to spend more, you can instead request the card issuer to increase the limit for the card.
A higher credit limit allows you to utilise the card more while sticking to the thumb rule 40% credit utilisation ratio.
A responsibly used credit card can easily be the most beneficial financial tool for any individual. Timely payments and adherence to all other terms greatly increase the creditworthiness of the user.
However, defaulting on payments reflects poorly on the CIBIL score, making it difficult to avail loans and other forms of credit in the future. A smart credit card user is among the most creditworthy individual for financial institutions.