Did you know that a whopping 36.24 million credit cards were operational in India as of January 2018? This was revealed by a Reserve Bank of India report, which also stated that between January 2017 and January 2018, 7.39 million new credit cards were issued. Given the multiple benefits that credit cards offer, these numbers should come as no surprise. One of the biggest advantages is that if you use your credit card wisely, you can actually improve your CIBIL score, which in turn open up many other advantages for you.
So, how do you use a credit card wisely? Here are some tips.
Pay Your Bills on Time
Not paying the complete due amount on your credit card bill well before the due date is the biggest mistake you can make. Card issuing companies charge a hefty interest on the outstanding amount. And, this is how people fall into the notorious “debt trap.” If you simply focus on the minimum amount, the debt will continue to grow rapidly. So, use your credit card sparingly and only spend the amount you know you will be able to repay on time.
Pay the Outstanding Amount Through Direct Debit
You must pay off all outstanding debt on time if you want to maintain a good CIBIL score. Setting up a direct debit from your bank account is a great way to make sure that you make all of your payments, including that for credit cards, on time, without having to worry about keeping track of due dates every month.
Check Your Credit Card Statement
People usually don't check their credit card statement if they're already aware of their payable amount. This is a mistake. The statement contains information about all transactions during the billing cycle, your credit limit, the amount you've spent and your reward points, all of which are very important. Checking your statement regularly will help you identify your usage pattern and build discipline. It will also help you identify and correct errors, if any.
Beware of Fraud
Credit cards offer you great convenience, but it is highly important to take all requisite measures to avoid fraud. Let' say you are shopping online. Ensure that the website has a secure payment gateway. Never go ahead with a transaction if something feels out of place. Also, never divulge your credit card details over the phone.
Use Reward Points
Find out about the current status of your reward points by looking at your credit card statement and don't forget to redeem them. Also, when you're deciding on a credit card, check everything it offers, from the credit limit to its reward system and the reward redemption process.
Discipline and vigilance are the key to effective credit card management. By using it wisely, your credit card can be a great convenience as well as a stepping stone to a good CIBIL score.