5 Tips on Using Your Credit Card Wisely

Credit card dues are an expensive proposition. So, here are some tips on using your credit card wisely, because the lure of buy today and pay later gets the better of most of the investors very easily. Credit card liabilities are the worst form of loans available in the market today because of their high interest rates. They are the single most important factor in making your financial planning go haywire.

Here are some tips on using your credit card wisely that will make your life less miserable.

Credit cards usage and your credit score

Most of the investors are blissfully unaware that credit cards usage is linked to your credit history maintained by credit  rating agencies. The way you use it influences your credit score. This has already become a very important factor in India as even a home loan you take in the future will be linked to how good or bad your score is.

So it’s a moot question to ask if credit card debts are good. Keep paying your credit card bills on time and never skip a payment thinking you will pay next month. A credit card with no dues contributes to a positive credit score. This is one tip on using your credit card which many people falter on even after being aware.

The less the number of credit cards, the better

If you belong to the group of investors who take pride in owning many credit cards, then you could be heading for big trouble. Anything you want to  achieve with ten credit cards, you can do with just one to two of them.

You must be aware of how many credit cards you must own. Keep the clutter less by owing just one or two. It helps you manage them better, pay bills on time and avoid dues. Remember that your request to own a new credit card when you already have some, will impact your credit scores.

Use your credit limit judiciously – tips on using your credit card wisely

Make sure you have a very high credit limit on your credit card. If you are opening a new credit card, ask for an increased credit limit. If you have an existing card already, take a trip to the bank to increase the credit limit.

Note that increasing the credit limit should not be construed as wanting to splurge more on credit cards.

A higher credit limit combined with low usage is good for your credit score. This implies that  your credit limit is always huge however, you have never ever used it completely. This positively affects your credit score. Do not go beyond spending more than 50% of your credit limit.

Use all your credit cards from time to time

If you have say two credit cards, you need to ensure that you use both of them. In case of more, you need to use all at some point or the other.

Non usage of credit cards can lead to banks closing them or even reducing your credit limit. This will negatively impact your credit score. Make sure you pick each credit card for usage of certain bills. So you could use one for paying for your movies and dining outs while the other for paying your utility bills.

This rotation of payment ensures that all your credit cards are being used. This is one of useful tips on using your credit card wisely, if you are using more than one.

Close and open credit card accounts carefully

When you open a credit card account, make sure you stick to a good brand name so that support services offered after the sale is good. Having little or no debt when you open your account is advisable.

If you have more credit cards and you want to close some of them, think carefully before you do so. Remember that the oldest credit card is possibly the most important one for you to have. If you need to close some, go with the most recent one.

Keep in mind that closure of credit cards in too short a span of time can affect your credit scores negatively. Span your closure across a long period of time so that the damage is less.

Have a safe time swiping your credit card. !