What is a Credit Card and How to Get Most use Out of it?

0
48
views
What-is-a-credit-card

What is a Credit Card

In recent times, the payment mode has been changed drastically and people are more diverted towards cashless payments. Defining the current standards of market finances processes, the credit card is one of the promising modes of payment that has given new directions to the processes of different transactions in the market.

In simpler terms, it can be defined as the introduction of a card that allows the user to borrow money from a bank to continue a specific purchase. There is wide flexibility in the type of purchases that could be done with the help of credit cards.

 

 

Once the purchase is done, there will be a decided grace time during which the credit card user has to pay the borrowed money. Most likely, 25 to 30 days are allotted as a grace period to the user.

However, in circumstances when the user is not able to pay the amount with in the decided time frame, he or she will be charged a particular amount of interest for the same. In some cases, the flexi pay feature is also present that allows the user to pay the outstanding amount in monthly installments.

Altogether, credit card is introduced to offer an ease to the users to keep their finances intact and sorted with the help of these postpaid payment strategies. Depending upon your credit health in the market, almost every second bank offers you the credit card with exclusive offers. There might be certain guidelines and policies that might differ from bank to bank, but as a whole all the credit cards work under same policy.

The limit of your credit card is also pre- decided by the bank authorities and is given according to your annual income, expenses and your spending capacity. Ideally it is considered that one should only utilize 30% of his existing credit card limit to enjoy a consistent credit score in the market.

Optimizing the Use of Credit Cards
Having a credit card has become an essential part of our lives. But it is very substantial to make sure that a credit card holder keeps the proper usage of it. There are certain ways through which you can optimize the use of credit cards. This can further help you to live a life with easy and happy credit health.

1. Track your Spending with the Credit Cards
To stay in good books of credit score in the market, it is important to keep a good control on your expenses. As discussed above, only 30% of total limit should be used from your total credit limit to ensure that you have an overall credit score.

It helps you to control your expenses and keep a track on your spending. If you owe a credit card, it becomes easy to check your expenses with the help of checking your statement. This will give you a vivid idea about the expenses and spending of yours in a more elaborate manner.

2. Pay your Credit Expenses on Time
It is very important to keep a record of the date on which you have to pay the due amount. It helps you to maintain your clean record in the market. Moreover, in cases if you fail to pay the amount on your due date, the bank will charge you a hefty amount for the same.

To make the best possible use of your credit card, it is important to pay the outstanding payment on time to avoid any extra charges as interest in your card.

3. Maximize your card repayments
A credit card gives you the opportunity to pay the minimum due amount for your spending in case, you are not able to pay the complete payment. However, it is important to ensure that you should avoid paying the minimum due and pay the full amount.

This will help in easing from paying the amount at one go. Otherwise, it will take more of years to pay off your debt completely and you will keep on struggling for the payment of the debt for a very long tenure .

4. Set an Ideal and Sensible Credit Limit
No matter how good your credit score is and how huge credit limit is being offered to you. It is advisable to set an ideal and sensible credit limit for your credit card.

This will also play an important role in controlling your expenses and limiting your expenses. This will let you to make sure you only spend the amount that you can afford.

5. Frequently Check your Credit Card Statement
It is advised to have a practice of checking your credit card statement on frequent basis. It helps you to get a complete information about your expenses, the nature of expenses and any hidden charges if applicable on your credit card.

It is important to have a vivid understanding of your expenses and spending. It helps you to analyze and track your record of expense. In case, you have been charged extra charges or rate of interest.

6. Close your Credit Card Properly
If you are not using your credit card and wishes to discontinue its use, it is important to close your credit card properly.

This will help you in letting you have a good credit score altogether. By talking with your credit card team, make sure you follow all the instructions that are needed to completely close your credit card. This will help you to not being tagged as a defaulter in the list.

All these processes and steps are important to make sure you get the complete optimization of your credit card. If for any of the case, you are not following these instructions and process, you might not get the complete benefit from the credit card. Being a new user of a credit card, it might be possible that you might have doubts with its proper usage, at this time , you can always talk to the concerned authorities to know the best ways to optimize it in beneficial manner.