Knowing how to use a credit card effectively is the homework that you must do before you apply for one. Credit cards are all about benefits aimed at making your future purchases cheaper.

However, cardholders often lose track of their expenses to gain rewards and receive a hefty bill at the end of the month. Failing to pay such dues incurs a higher rate of interest, increasing their debts. Some users pay the minimum amount due to avoid the same, an option which must be avoided.

Hence, it is best to learn all the features of a credit card and how they impact your daily expenses. Only understanding them closely will enable you to use the card effectively.

Here are a few smart ways to do that:

• Refrain from using more than 30% of your credit limit

Credit limit is the maximum amount that you can spend or borrow with your credit cards. Utilising all of it makes you look credit hungry. Thus, it negatively impacts your CIBIL score.

Now, your credit score is mandatory to avail an unsecured loan in the future. A minimum of 750 score makes you more eligible and creditworthy for such financial products. Also, credit score is equally important to avail credit cards.

Hence, you must keep your credit utilisation lower than 30% of the card limit. Doing so improves your CIBIL score.

• Read your credit cards statement like a pro

The second tip on how to use credit card is to read your monthly statement carefully. It contains various data of which the total payment due and minimum payment due are crucial.

• Total payment due – It is the total amount that you currently owe your credit card company. Paying the total payable amount clears all your dues and also increases your CIBIL score.
• Minimum amount due – It is a particular percentage of the total amount which may also include interest. Paying the minimum payable amount means you don’t need to pay interests till the upcoming due date. It carries forward your full dues to the next month’s bill but also lowers your credit score.

Hence, always ensure that you pay the total payment due and not the minimum payable amount.

• Learn how you earn reward points

You must understand how reward points work while you are learning how to use a credit card.

Some credit cards are suited for specific expenses like travel, fuel, entertainment, groceries, etc. Transacting with these cards bring you high reward points when you purchase such products or services.

Other credit cards provide reward points on almost every expense. However, the number of points might be lower compared to regular credit cards.

Hence, you must pick a card that suits your regular expenses. For example, opt for the Bajaj Finserv RBL Bank SuperCard if you shop overseas a lot or spend extensively on dining. This card brings you 20 reward points for every Rs. 100 that you spend on such transactions.

It also comes with two industry-first features – ATM cash withdrawal with zero interest on repayment for up to 50 days and zero interest with an emergency personal loan against the unutilised credit limit for up to 90 days. 

• Use the card to pay for big-ticket purchases

The next essential tip on how to use a credit card is about EMI payments. Credit cards give you the power to split and pay your big-ticket expenses through EMIs – you divide the amount of a product you purchase into small and convenient monthly instalments. 

The Bajaj Finserv RBL Bank SuperCard lets you pay for apparel, accessories, electronics, and many more in easy EMIs. 

Bajaj Finserv additionally brings pre-approved offers the save you time when seeking these credit cards via a straightforward process. Pre-approved offers also come with personal loans, home loans, business loans, and several other financial products. Provide only your name and phone number to check your pre-approved offer online.

• Take advantage of cashbacks and discounts

You can enjoy regular offers, discounts and cashback on several brands and retailers by using your credit card.

Such offers make a purchase more affordable and are reflected in your invoice instantly. A cashback, however, works like a discount in your monthly statement; it does not reflect in your bill immediately.    You must also know about the credit card interest rates when learning how to use a credit card. The interest rates are charged only when you fail to pay either the minimum or the total payment due within the grace period. Hence, follow the smart tips to use your credit card carefully and enjoy its multiple benefits.

Author: Reena Rawat