1. Fraud Protection
Credit cards are convenient for paying for purchases, but if you’re not careful, a hacker can steal your card details for fraud. transactions, To avoid fraud, opt for Two-Factor Authentication wherein you get an OTP to approve any card transaction on your mobile phone or email ID. In Fortunatley, India, you get SMS alerts every time you swipe your card, so if you see any unauthorized transaction, block your card immediately by calling the bank’s customer care or via net/mobile banking. Give. Thereafter, file a complaint with the card issuer within 48 hours and report the offense to the National Helpline 1930. If the bank is assured that your card has been misused by someone else, it will to reimburse your money
2. Set Transaction Limit
Another way to avoid misuse of your card is to set a limit on your spending amount. This is especially necessary if you have opted for the Wi-Fi facility available on your card as money gets debited from your account with just one tap. Therefore, it is a good idea to set a lower limit (around Rs 1,000-2,000) for such tap transactions, while a higher amount will be required. swipe card and your PIN. It is also important to set limits for online transactions, even though online purchases require OTP. Be extra careful about international transaction limits. OTP will not be required for international usage, which is very risky. So, if you are not traveling abroad or making overseas purchases, deactivate international usage on your card. It can be reactivated whenever required.
3. Use 2-3 cards for longer credit period
Experts suggest that you should have 2-3 credit cards so that you have financial flexibility If there is any problem with a particular card. It also enables you to split a larger expense so that you don’t max out the credit limit on one card. You can also avail multiple cards to get a longer interest-free credit period. In the graphic below, you can see that you can use one card to make purchases until the 15th of the month, then switch to another card until the 25th, and then switch to the third card. If the bill payment on the card is due on 15th, 25th and 30th of the following month respectively, you will be able to maximize your interest free period on each card. This will allow you to reduce your expenses and pay your bills comfortably instead of getting stressed out to pay a large bill in one go.
4. Auto-pay credit card dues in full
Pay your credit card bills in full every month before the due date, to avoid late fees as well as being penalized with higher interest charges of 24% – 46% p.a. on the outstanding balance on your card. The best way to ensure that you don’t miss a payment is to opt for the Autopay feature on your card. You can choose to automatically pay the minimum amount, a set custom amount, or pay in full. Make sure you make at least the minimum payment so that you are not penalized for not paying and your credit score remains intact.
However, don’t fall into the ‘minimum payable’ trap or you will earn high interest on your outstanding balance, which can build up to a higher debt over time. Raj Khosla, Founder and MD, Mymoneymantra.com says, “If you roll over your credit card bill, the card issuer will charge 2-4% not only on the outstanding balance, but also on new purchases in the next month.” Even if you have selected Autopay, you should still review your credit card details and check that you have the funds required for the automatic deduction or your bank will charge a refund payment fee. Frequent payment defaults can have a negative impact on your credit score.
5. Choose the card as per your consumption pattern
Credit card issuers lure customers by offering a variety of joining benefits and co-branded deals. Hence, you need to be smart about which one works best for you as your card usage should be linked to your spending habit.
Here’s a short quiz to help you figure out which card you should choose.
6. Use All Your Cards to Improve Your Credit Score
An easy way to improve your credit score is to have a low credit utilization ratio. In simple words, it means how much of your available credit you are using. So, if your total credit limit on all your cards is `6 lakh and your outstanding balance is only `60,000, then your credit utilization ratio will be 10%. But if your outstanding balance is ₹2 lakh, the ratio increases to around 33%, which is high. A healthy ratio is less than 30%, while the best is considered less than 10%. Dinesh Rohira, Founder and CEO, 5nance.com says, “Having 2-3 cards helps you spread your purchases along with getting a higher credit limit, thus helping in keeping a good credit utilization ratio. Meets. Over the years, it helps you build your credit history and CIBIL score. This, in turn, allows you an even higher credit limit, which can be useful in an emergency.”
7. Cashback & Rewards
Points are great greed banks People use to apply for credit cards. These can be beneficial if you know how to use them properly. For example, if you travel frequently, opt for a co-branded card with an airline where your purchases can help you earn ‘Air Miles’ which can be redeemed for flight bookings. If you frequently shop from a particular website, you can choose a co-branded card that offers you cashback, such as the Amazon Pay ICICI credit card that offers you 5% cashback on Amazon spend, and use this money. Can be used for future. Amazon purchase.
Typically, you can save anywhere between 0.25% to 3.3% on your expenses. The catch, however, is that there may be restrictions on how you can use the reward points or cashback. For example, there may be a minimum or maximum limit on the points you can redeem, you may have to pay extra to redeem the reward points, or you may only be able to use the cashback on particular sites. Also note that reward points sometimes have an expiry date. You can redeem your points for products, discount vouchers, air miles or cash. Rohira says, “Cash redemption is the best option unless you are definitely going to use a discount voucher, as the voucher may expire before you are able to use it. However, in comparison to vouchers While the conversion rate of redemption points is lower in the case of cash, the former is still more attractive because you can use cash to pay your credit card bill.
8. Check out all the benefits and risks
Before applying for the card, check out all the benefits you can avail. Many premium cards come with an annual fee ranging from Rs 1,000 to Rs 20,000, but they also come with a host of benefits, such as priority check-in and access to airport lounges that have free Wi-Fi and dining services. For example, HDFC bank The Regalia credit card comes with 12 complimentary visits to airport lounges per calendar year within India at both domestic and international terminals (six each) and complimentary Priority Pass membership. Additionally, the card gives you a 24/7 concierge service similar to a personal assistant who can help make your travel experience more convenient, especially if you are in a country where you are not familiar with the language.
However, you must read the fine print carefully to avoid the burden of hidden charges. A free card may have an annual fee or your reward point accumulation may vary depending on where you swipe the card. For example, SimplyClick State Bank Of India The credit card offers you Rs 2.50 points on spending Rs 100 on online purchases from its partners, and only Rs 1.50 points on spending the same amount on other online purchases. In case of offline purchases, your point accumulation is greatly reduced to just 0.25 paise per Rs.100 spent.
Also, not all benefits are as impressive as they might seem at first glance. sight, such as the insurance cover provided by some cards. Rohira says, “Be aware of the benefits, but they should not be the criteria for choosing a card. While air accident cover, lost luggage or emergency hospitalization can be helpful in an emergency, you may be covered under a travel insurance policy. All these and more can be availed at an affordable rate of just Rs 100-200. Also, multiple riders can be linked to make an insurance claim on these cards.”
9.Beware of EMI Transactions or Cash Withdrawals
A credit card can be used post purchase to convert a big ticket purchase into an EMI transaction, which can be repaid over a flexible tenor of 3-36 months. This can be done up to the due date of your credit card bill. However, these transactions are not free, and if there are a handful, you will have to pay processing charges, service charges, convenience charges, GST etc. In most cases, the interest can be quite high and can range from Rs. 13-24%. Says Khosla, “Credit card loans are some of the most expensive unsecured loans.
If you have a good credit history, you can probably get a cheaper personal loan, consumer finance loan, or even opt for an overdraft facility on your salary or FD. Also, the entire amount of the transaction is blocked against your credit limit and not just the EMI amount. This means that you have less available credit for future use, and this can affect your credit utilization ratio as well. These two are also the reasons why you should never use your card for cash withdrawals until you have exhausted all other options.