source: photo by ales nesetril on unsplash
a credit card is one of the most convenient accessories in the modern financial world. the various benefits that a credit card brings are what motivates people to go in for one.
credit card payment is instant and valid internationally. further, you get additional benefits like cashback, offers, and rewards, and if you use your card responsibly, you can improve your credit rating.
the downside, however, is that it is possible to misuse a credit card. here are a few common mistakes that we tend to commit when we use a credit card:
1. relying too much on credit card rewards
don't put too much faith in credit card rewards. they encourage you to increase your credit card payment more than necessary.
2. operating on minimum balance
even if you pay the interest every month, ultimately, you will have to pay the principal. clearing your credit card every month will save a lot of money in interest.
3. using your credit card for household items
never use your credit card for things like groceries or paying utility bills. you will end up unnecessarily inflating your monthly credit card bill.
4. paying for medical expenses
you can incur huge debts by using your credit card to pay for medical expenses. instead, get adequate health insurance to cover your medical needs.
5. the danger of cash advances
some credit card companies issue cheques to customers, encouraging them to use the money to buy "something nice".
remember: no one hands out money for free. these cheques will attract interest against the amount from the day you cash them.
if you are careful and avoid the mistakes we highlighted above. you can enjoy financial freedom with your credit card. a few best practices are given below:
1. make timely payments
if you make your credit card payment on time every month, you will save a lot of money on interest and late fees and will be able to maintain a good credit score.
2. clear your bill completely
Why should you pay the credit card company money you could put to use better? Clear your bill completely every month to enjoy zero-interest credit.
3. be aware of the billing cycle
refer to the terms and conditions, and make your monthly payment within the specified dates to avoid credit from rolling over to the next month, thereby attracting interest.
4. maintain a low credit balance
if you control your spending, you'll find it easier to clear your monthly credit card bill. moreover, a low credit balance can increase your credit score considerably.
5. pay attention to your monthly statement
don't chuck your monthly statement into a drawer the minute you get it. check carefully for fraud and see that everything is in order, as expected.
cred is an app wherein you can earn points when you use your credit card. you can encash these points for certain goods and services. cred also benefits you in the following ways:
1. keep track of payments
cred offers a clear picture of how much credit is left on your credit card within the monthly limit and, most importantly, the interest amount on your outstanding balance.
2. receive regular alerts
cred helps you with your credit card payments by giving you a full report on payment amounts, due dates, and the total due amount. cred also uses your real-time credit rating to process your data, thus maintaining accuracy.
3. alternative payment options
you get various payment options on your credit card account. cred helps you with information on how to pay your credit card bills in the way that best suits your circumstances.
you use a debit card to withdraw your own money held in your bank account, whereas, with a credit card, you use money lent to you by the credit card company.
a cvv number is a three-digit number written on the reverse side of your debit or credit card. it contributes to added security, and you should never share it with others.
inform your credit card provider immediately. it is helpful to store the customer care number of your credit card company on your phone.
"pin" stands for "personal identification number." it is a four-digit or six-digit number that only you know, and you should never share it with anyone else.
we can consider a pin a numerical password to be used at a point of sale (pos).
unless it is a dire emergency, please avoid using your credit card to withdraw cash.
while you are usually not charged extra for using a debit card, you may be charged 36% to 38% interest on the money you withdraw using a credit card.
credit card companies offer reward points against frequent use of credit cards. the more you use your card, the more points you accumulate. you can later redeem these points to receive gifts.
if you are self-employed, you need to show annual income proof, be aged between 25 and 65, and have a good credit score, preferably 750 or above.
you will also have to furnish the usual documents for identity and address proof.
you no longer need to regard your credit card payment due date with dread. thanks to cred, your credit card payment process will now be a breeze. you get rewards for making your card payments through this app.
moreover, you get access to many of the other features mentioned above to make each credit card payment more manageable than ever.