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Thursday, December 7, 2023

Here’s how to put your credit card to optimum use

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According to recent reports, credit card usage fell by 13.10% in March 2020, while their transaction value dropped by 18.92% at PoS systems. During a time of such economic instability, responsible use of credit cards can prevent an individual from ending up in debt and paying hefty penalties. Credit card benefits can be advantageous, but only if a user knows how to utilise it to its full potential. In fact, if used responsibly, credit cards can help save quite an amount for an individual in the long run.

Since these cards can carry a balance, unlike debit cards, spending is not limited to the funds in an individual’s account. Credit cards can, thus, be a great financial resource to make substantial expenses like purchasing electronic gadgets and jewellery. 

Optimum use of credit cards

Mentioned below are 6 reasons why you should apply for credit card online if you do not have one already.

  1. Build credit score

Unlike a debit card, credit card transactions show up on your credit report. Credit card issuing institutions have to report card activity and repayment records to the credit bureau.

Thus, if an individual has no credit history or is trying to improve his/her CIBIL score, credit card transactions can help in the process. However, paying only the minimum due can hamper credit scores, which can reflect negatively on one’s creditworthiness.

  1. Travel benefits

Certain partnered credit cards come with additional benefits, like enabling one to save substantially on one’s air-travel. These benefits include travel points, frequent flyer miles, free airport lounge access, travel vouchers, dining, and much more.

Individuals should check the credit card benefits for travellers with their financier before their next trip, and plan accordingly to maximise savings.

  1. Fraud safety

When a cybercriminal steals and makes unauthorised payments using one’s debit card, funds are directly deducted from the savings or checking account. Insufficient funds for legitimate transactions can lead to late or missed payments, while the victim tries to recover the losses.

On the contrary, credit cards offer fraud safety as the victim will not bear any direct losses. Report the unauthorised transactions immediately to the issuer and get the card blocked, and wait while the matter is investigated.

  1. Personal loans during emergencies

In case of financial emergencies, credit card users can avail instant funding against the unutilised credit limit on their card. This type of personal loan facilitates a quick and convenient method of borrowing against minimum documentation and instant approval.

If an individual has a clean credit history, they can approach the customer care department or apply online for loan against credit card. However, it is crucial to enquire about the processing charges and interest rates before signing any document.

  1. Utilise grace period

Unlike debit card payments where the transactions reflect instantly on your account, your savings remain intact until you repay the credit card bill. Thus, spending early into the billing cycle means the user has a more extended grace period to repay the due, which makes the purchase slightly cheaper.

Additionally, if an individual repays the bill from interest-bearing savings or checking account, the interest accumulated, however small, helps ease the repayment. Thus, make sure to check the credit card agreement for grace period terms of service to enjoy this benefit.

  1. Rewards points and cashbacks

Many financial institutions offer rewards points and cashbacks as credit card benefits on making payments using the card over cash. These benefits include fuel surcharge waivers, restaurant coupons, and discount on groceries and merchandise from select retailers.

Individuals can further redeem these reward points for additional annual savings. For instance, the Bajaj Finserv RBL Bank SuperCard provides benefits like 20000 reward points as a welcome gift, which can accelerate yearly savings up to Rs.55,000.

The financier also provides several pre-approved offers on products such as personal loans, credit cards, and business loans to make the application process more streamlined. You can check your pre-approved offer by providing details like your name and contact.

Since these cards are universally accepted,rbl credit card benefits can seem lucrative to make purchases and spend more than what you can afford. Using the credit card optimally can help ease the repayment, save on interest rates, improve credit scores and more.

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