How to Make the Best Use of Your Credit Cards? [August, 2024]

Credit cards can be a valuable tool for managing your finances and building your credit score. With so many different cards available, it can take a lot of work to know which is best for you and how to make the most of it. 

This blog post will share 7 tips to help you get the most out of your credit cards. From understanding how rewards programs work to finding ways to save money on interest, these tips can help you maximise the benefits of your cards and put more money back in your pocket. Read on to find out more. 

1. Review Your Credit Card Statements

Reviewing your credit card statements regularly is essential to ensure that you use your credit cards responsibly and stay on top of your finances. Take the time to review each statement to identify any suspicious charges or mistakes you may have made. It will help you stay informed about your spending habits and will allow you to spot any fraudulent activities.

Additionally, it is important to keep track of when payments are due so that you don’t incur late fees. It is also important to note any changes in interest rates or annual fees that may occur during your statement.

2. Consider Reward Programs

Most major credit card companies offer rewards for using their cards. These rewards can include cash back, points, or other incentives. With cashback rewards, you can earn a certain percentage of your purchases as a cash bonus. Points-based rewards programs often offer more flexibility, allowing you to redeem points for gift cards, travel, or merchandise.

Many credit cards offer bonus categories where you can earn additional points or cash back. For example, some cards offer double points at gas stations or 5% cash back on groceries. If you frequently make purchases in these categories, a rewards program could help you save money. 

Another important factor to consider is whether or not there is an annual fee associated with the card. Many rewards cards have annual fees that can offset any benefits earned from the rewards program. Do the math and compare your options before applying for a card. 

3. Use Your Credit Card for Budgeting Purposes

Credit cards are a great way to help you manage your finances. Using your credit card for budgeting ensures that you make wise financial decisions. Here are some tips to help you make the most of your credit card when it comes to budgeting:

• Track Your Spending: Track your spending on your credit card each month and compare it against your budget. It will help you stay on top of your spending and ensure you are not overspending.
• Set Alerts: Set up alerts for your credit card so you know when a purchase is made and how much is spent. You can also set up automatic payments from your checking account to your credit card to stay on top of your spending.
• Pay Off Your Balance in Full: Always try to pay your balance in full each month. Not only will this help you avoid interest fees, but it will also help you keep your credit score in good shape.
• Use Credit Card Rewards: Take advantage of any rewards or cashback opportunities your credit card offers. It can help you save money and even earn rewards points that you can use toward future purchases.

4. Avoid Cash Advances

One of the most important things to remember when using your credit cards is to avoid cash advances. Cash advances can be costly and quickly put you in a financial hole if you are not careful. A cash advance is when you withdraw cash from an ATM or other source using your credit card. 

This type of transaction can come with very high-interest rates and fees, which can add up quickly if you are not careful. On top of that, interest on cash advances usually starts accruing right away, meaning you will be charged interest even before your credit card bill is due. Furthermore, the interest rate on a cash advance is often higher than the regular rate on purchases.

It is best to avoid cash advances to make the most out of your credit cards. If you find yourself in a situation where you need to take out a cash advance, it’s best to have an alternative repayment plan so you can pay off the balance as soon as possible.

5. Check if Your Credit Card Has an Annual Fee

When choosing a credit card, it is important to take the time to review all of the fees associated with it. One of the fees you should pay special attention to is the annual fee, which can significantly impact your budget over a year.

An annual fee can vary depending on the type of credit card you choose. There are several types of credit cards, as listed below:

• Rewards cards
• Cashback credit cards
• Travel credit cards
• Fuel credit cards
• Shopping credit cards
• Secured credit cards

The annual fees vary from card to card. The average annual fee for a credit card is Rs. 499 + taxes. Make sure to check for any additional costs associated with your card. Some cards may charge a yearly fee for special services such as balance transfers or cash advances.

Wrapping Up

Credit cards can be a great tool when used responsibly. Knowing how to make the best use of credit cards can help you stay out of debt, get rewards, and build credit. By paying your balance in full each month, avoiding high-interest rates, and using the right cards for specific needs, you can maximise the benefits of having a credit card. With these simple tips, you can make the most of your credit cards.

FAQs

Q. How do I choose the best credit card for me?

Consider factors such as your credit score, spending habits, and the rewards and benefits that are most valuable to you.

Q. How can I maximise my credit card rewards?

 Optimise your spending by using your credit card for purchases that earn bonus rewards, and be sure to pay your balances in full and on time to avoid interest charges.

Q. Is it better to pay off my credit card balance in full each month?

Yes, paying your balance in full each month can help you avoid interest charges and maintain a good credit score.

Q. What is the most important thing to consider when using a credit card?

 Always remember to pay your bills on time and maintain a low balance to avoid interest charges.

Q. What are the risks of using a credit card?

Overspending can lead to debt and high-interest rates, so it is important to stay within your budget.