Plastic Money or Credit Cards as popularly known is one of the most preferred channels to pay for a wide range of products/services. In this era dominated by technology based banking, Credit cards play a vital role in the way we buy and sell. Owning and managing a credit card comes with a lot of responsibility and calls for strict discipline. Failure to manage cards in a balanced manner may not only lead to excess spending and inability to pay up, it will also affect your credit worthiness and have a bearing psychological well being.
Some of the other intrinsic issues that arise as a result of ill management of credit cards are incurring excess fees/charges, fraudulent activities etc. Let's discuss some of the most useful Credit Card Management Tips that will help you to stay afloat in the long run.
- Read & Compare Before Applying
You may not really agree to to this point upfront, but the process of managing cards begins before getting the card itself. There is a plethora of banks offering a massive portfolio of cards that range from user specific cards to basic products for beginners, often putting you into a state of confusion. In the melee, you may end up signing up for a card that does not actually sync with your expectations.
Therefore, use a neutral comparison portal that lists out the features and rates offered, thereby helping you make well informed decisions on the card that you should actually be getting. Some of them also host additional information such as reviews by genuine customers and information on exclusive offers, contributing to your quest to get the best credit card for you.
- Read the Fine Print(Terms & Conditions)
As soon as you receive the card along with the welcome kit, verify the contents of the kit and also ensure you read the welcome letter along with the fine print that details the Terms & Conditions. Rates & Charges should be in accordance with what was communicated before signing up. In case of discrepancies, contact the bank for correction.
- Keep the Card and Credentials Secure
In the wake of increase in fraudulent activities of credit card both offline and online, ensure the card and user based credentials are secured from misuse. Bearing the following points in mind helps you in this regard.
- Do not share the credit card number or the PIN with unknown persons.
- Ensure the card is immediately returned as soon as it has been swiped at the POS Machine.
- Do not share passwords, online banking login details with anyone. The bank will never ask you for these details either.
- Do not write down PIN at inappropriate places. You can either memorize it or use relevant tools on your phone to store them & change it frequently.
- In case of suspicious charges on the account that you do not recognize, report them to the bank immediately and follow up for a quick resolution.
- Use Wisely
Always remember, it's not your money. The bank lets you borrow on pre agreed terms such as paying with interest. Credit cards are quite tempting and hence we tend to often have this psychological advantage of jumping into a buying spree. As long as you can afford and confident of paying back quickly, go ahead and use wisely. The interest is computed on a daily basis and you may end up incurring huge interest for carrying the balance in months to come.
Try to pay off the balance in full before the statement close date or pay the maximum amount. Covering only the minimum payment due will lead to addition of interest and piling up of the balance, month over month.
- Avoid Withdrawing Cash
Unless you’re in an emergency, do not make cash advances unnecessarily for the simplest reason. You not only incur an additional fee each time you make a cash advance, a higher rate of interest is applied for withdrawal from an ATM. In a longer run, its tends to become a habit to make cash withdrawals for petty expenses.
- Track Spends & Review Statements
Need we say more in this regard? Sometimes, we end up making many purchases in a given billing period and tend to lose track. To ensure sound management of the credit card, use online and offline tools to track spends. The following will help in this pursuit.
- Review monthly statements before making a payment.
- Use online banking or smartphone based app to monitor spends on a regular basis.
- Always probe further if you come across an unknown or suspicious charge on your card .If need be, report it immediately.
- Be up to date With Offers & Promos
A plethora of deals, rewards are offered by credit card issuers on your card making you eligible to not only receive discounts and rebates, but also freebies and deals that actually help you save money while you enjoy the deal. Also watch out for periodic promos that give you access to the best of lifestyle based goodies. You can also track the reward point earnings and exchange them for rewards from the catalogue.
- Use the EMI Facility
Most of the cards let you easily convert large value purchases into Equated Monthly Installment scheme at a zero interest fee if you’re willing the split the purchase amount into installments. This actually helps you save loads of money in terms of reduction in the interest charges paid. The EMI facility also ensures easy access to your favorite article by means of discounts offered by partner stores.
- Get Add On Cards
One of the most preferred ways to share the credit. Issuers and banks offer free Add On(Supplementary) cards for your loved ones. This is a card issued on the same account, sharing the same terms and limit. Depending on the bank and the offer, one can get up to 5 Supplementary cards for your immediate family members. Spends on Add On cards are billed to the main account, helping you track without any hassles.
Some of them even let you assign individual spend limits for the Supplementary cards issued.
- Ask for Credit Insurance
Most of the banks extend various types of insurance such as Credit Protection where the monthly payments and the balance is taken care of by the program in case of death or disability. This is a great way to secure your credit card and to ensure little burden for your loved ones in case of an accident or mishap.
There are many such insurance options that allow you to secure the outstanding balance.
In addition to the above, there are many untold facets involved in managing a credit card. For the beginners, having a card is one of the most recommended channels to build a worthy credit.