As a credit card holder, you might be aware of the benefits and convenience that it provides to its user on every use. The convenience being the part where you avoid carrying cash and the benefits pertaining to the reward points that you earn on each expense. However, the way in which you use your credit card and the responsible use of credit card also assists in the maximizing of perks and privileges that you might gain for it. The responsible use of credit card can imply a healthy financial habit that can last for a lifetime. Therefore, we provide you with a ‘users’ guide’ highlighting the aspects and giving you the knowhow important to using a credit card.
How to Ensure Responsible Use of Credit Card?
- Make Repayments Regularly
A clean and consistent credit record is a must for any financial assistance and purchases in life. Therefore, if you pay the total outstanding amount in full regularly, it improves your credit score. Paying off the entire balance every month is a sign of financial discipline and should be followed, thus indicating responsible use of credit card . If you feel you might forget the date the payment is due, setup automatic debits. SURE, keeping this in mind, only provides the option of paying in full and sends multiple reminders before the due date. These payments are reported to the credit bureau and therefore timely and regular payments can be favorable for you.
- Make Use of Credit Card Rewards, Cashbacks and other Benefits
Your credit card can get you cashback or rewards on categories like travel or even basics like grocery purchases. If you manage it properly, you might earn these for everyday purchases and save up on a lot of expenses. However, with this, another tip that follows is that, though you should make use of all chances to earn cashbacks and rewards, there is no advantage in trying to spend more just for the sake of earning rewards. This might lead to an increase in your total outstanding balance which might become too huge for you to repay, thus negating the above.
- Keep a Tab on your Credit Card Expenses
Managing your monthly expenses can become easier when you use a credit card and keep a track of your spending while doing so. This makes it convenient for you to know when to make that extra spend and when to cut down on your monthly expenses. Tracking your expenses can be useful for responsible use of credit card and timing your purchases so that you know the due date to pay back the total amount and make use of the interest free period.
- Make Use of the Fraud Protection Measures
As a customer, what you get from credit cards may not be available on any cash payment that you make. Fraud Protection is a credit card feature that can save the users from their credit card getting hacked and provide the option to file a chargeback in case of fraudulent transaction on the part of the merchant in the context of a purchase.
- Try to Avoid Paying Just the Minimum Amount Due
At first look, paying the minimum amount due might seem like an attractive option wherein the users can pay just about 2 to 5% of the total outstanding balance and keep using the card. However, the irksome factor here is that the total balance keeps getting added to the next month’s outstanding amount and before you know it, the balance may become too huge for you to pay off. This is a form of debt trap for the card holders and is a detractor for responsible use of credit card . SURE , however, solves this issue and removes this feature, ensuring that users pay in full and therefore, make use of the interest free period.
The proper way to use a credit card is the one that follows the tips above and increases its perks to the user, helping them build a good credit history, getting them cashbacks or reward points on almost every purchase and offering fraud protection for online purchases.
Bringing all the above points into consideration and acting upon it can make the credit card an even better payment option and additionally, a money management tool for you. Regular Payments, tracking expenses, paying in full can improve your credit score that can further lead to easy approval of loans for big ticket purchases in the future. Overall, as mentioned in the beginning, it assists in the responsible use of credit card and in setting a financial habit or discipline that can be greatly beneficial to the card holder.