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Credit cards have become a ubiquitous part of modern-day spending. In India, the popularity of credit cards has increased, with over 50 million in circulation as of 2020. That’s a lot of plastic power! While a credit card offers enhanced convenience and flexibility, it is a double-edged sword if not used wisely. In fact, did you know that the average interest rate on credit cards in India is around a whopping 36%? That’s higher than most personal loans and can make a severe dent in your finances if not managed properly. When used responsibly, however, credit cards can be a useful tool for managing finances and building your credit score. In this blog post, we will explore how to use credit cards effectively and avoid common pitfalls that can lead to debt and financial hardship.
Pin your hopes on the tips for using credit cards wisely, and avoid common pitfalls that can lead to debt and financial hardship.
One of the most important things you can do to use your credit card wisely is to pay your balance in full monthly. By doing so, you can avoid interest charges and late fees and keep your debt under control. If you’re unable to pay your balance in full, try to pay as much as you can each month to avoid carrying a high balance and accruing interest.
Another important tip for using credit cards wisely is to stick to a budget. Before you make any purchases with your credit card, look at your budget and ensure you can afford to pay for it. Avoid making impulse purchases or buying things you don’t need, as this can lead to overspending and debt.
Not all credit cards are created equal, so choosing the right card for your needs is essential. If you’re trying to build your credit score, look for a card with a low credit limit and no annual fee. If you’re looking for rewards, consider a card with a rewards program that matches your spending habits.
Keeping your credit utilization as low as possible helps to improve your credit score, making it easy to get a higher credit limit in the future. It is recommended to keep credit utilization under 30%.
Credit card rewards can be a great way to save money or earn cash back, but they can also lead to overspending and debt if you need to be more careful. Use your rewards wisely by only redeeming them for things you need or would buy anyway, and avoid making purchases just to earn rewards.
For example, if your credit card offers cashback on grocery purchases, use it for your weekly grocery shopping. This way, you’ll earn rewards on purchases you would make anyway and avoid overspending.
|Top 20 Credit Cards||Annual/Joining Fee||Highly Suitable For||Best Features|
|Axis Bank Ace Credit Card||INR 499||Cashbacks and Reward Points||5% cash back towards bill payment, along with DTH Recharge and Mobile bills/ Recharge.|
|SBI Card Elite||INR 4,999||Shopping, Travelling, and Movie Tickets||● Welcome or joining reward in terms of e-gift voucher
● Exclusive Membership of Club Vistara as well as Trident Privilege
● Complimentary tickets for movies
|HDFC Regalia Credit Card||INR 2,500||Payments associated with Shopping and Travelling||● Complimentary access to lounge
● On every INR 150 spend from the credit card you will get 4 reward points
|Flipkart Axis Bank Credit Card||INR 500||Best Suitable for Online Shopping||● Card owner gets a Flipkart voucher as a welcome bonus or a joining reward
● 5% cashback on payment made towards exclusive partners, i.e. Flipkart and Myntra
|Amazon Pay ICICI Credit Card||Free of Cost||Online Shopping, Reward Points and Cashback||On each payment made towards Amazon you will get 5% cashback|
|Citi PremierMiles Credit Card||Rs. 3,000||Travel expenses||You get up to 10X additional reward points on making airline transactions through this credit card|
|HDFC Millennia Credit Card||INR 1,000||Cashbacks||On making payments towards the partnered brands 5% cashback will be provided|
|Standard Chartered DigiSmart Credit Card||INR 49 (Applicable Monthly||Online Shopping||Offers 20% off at maximum while shopping from the partnered brands|
|BPCL SBI Card Octane Credit Card||INR 1,499||For Fuel Refill at Indian Fuel Stations||Provides a 7.25% value back for payments made towards fuel refills specifically at BPCL petrol pumps|
|HDFC Bank Diners Club Privilege Credit Card||INR 2,500||Traveling expenses and Lifestyle||Complimentary membership will be a joining reward of Amazon Prime, MMT Black, and many more exclusive renowned brands.|
|Citi Rewards Credit Card||INR 1,000||Departmental Stores, Fuel, and Oil Outlets||Up to 2,500 reward points as a welcome bonus|
|IDFC First Select Credit Card||Free of Cost||Travel, Domestic Lounge, and Insurance Benefits||● Welcome gift in terms of vouchers up to INR 500
● 3 reward points for every 125 rupee transaction made from the card (offline)
● 6 reward points for every 125 rupee transaction made online through the card
|RBL Bank ShopRite Credit Card||INR 500||Retail shopping, Grocery, and fuel refill||● Welcome benefits in terms of reward points up to 2000
● One reward point on every 100 rupees, ten reward points for fuel purchases, and 20 points for grocery purchases
|HSBC Smart Value Credit Card||Free of Cost||Travel, Dining, and Telecom Spends
|● Complimentary access to the airport lounge (three)
● Amazon Gift Voucher of INR 500
● 50% discount on transactions made through Google Pay
|Axis Bank Magnus Credit Card||INR 10,000||Travel, Shopping, Movie, and Memberships||● Twelve Axis EDGE REWARDS Points on every transaction of INR 200 made through the card
● Opportunity to get Tata Cliq voucher or domestic flight. tickets worth INR 10,000 as a joining bonus
|HDFC Bank INFINIA Credit Card Metal Edition||INR 12,500||Rewards, Travel, Shopping, and Insurance||● 12,500 reward points and a welcome bonus
● Complementary one-year membership of Club Marriott
● Five reward points on every transaction towards retail shopping worth INR 150.
|Standard Chartered Ultimate Credit Card||INR 5,000||Fuel Refill, Utility Bills and Insurance||● 6000 redeemable points as a welcome gift
● Toward every payment worth INR 150, you will get five reward points
● You get the option to save 3% on the overall purchase made through the premium card
|Bank of Baroda Eterna Credit Card||INR 2,499||Dining, Travel, Movies, and Shopping||● Free membership of FitPass Pro for six months
● 10,000 reward points as a welcome bonus
● 15 reward points on every transaction of worth INR 100 towards shopping, movies, as well as, dining spends
|YES Bank Exclusive Credit Card||INR 999||Utility Bills, Transportation, Insurance Premiums, and other Miscellaneous Expenses||● 6 Reward Points on each transaction of INR 200 towards selected categories
● 12 Reward Points on each transaction of INR 200 associated with miscellaneous transactions
● 1000 Reward Points for every registration on YES PayNow
|HDFC Bank Diners Club Black Credit Card||INR 10,000||Travel, Dining, and Concierge Services||● One-year complimentary memberships of MMTDOUBLEBLACK, Club Marriott, Times Prime, along with Amazon Prime and much more
● 5 Reward Points on every transaction of worth INR 150
● Get accelerated Reward Points by purchasing through SmartBuy
Credit cards are widely accepted as a form of payment in many places worldwide. Here are some typical locations where an individual can use credit cards:
Retail stores are one of the most common places where credit cards are accepted. From department stores to grocery stores and clothing boutiques to electronic shops, credit cards are widely used for purchases of all types of products. Many retailers also offer exclusive discounts, rewards, and cashback programs to credit card holders, making it a smart choice for everyday shopping.
Credit cards are also widely accepted at restaurants, cafes, and fast-food chains. They offer a convenient and secure way to pay for meals, whether you’re dining in or ordering takeout or delivery. Some restaurants even offer special promotions or loyalty points for customers who pay with their credit cards, making it a win-win situation.
With the boom of e-commerce, credit cards have become the preferred mode of payment for online shopping. From e-commerce giants like Amazon and eBay to small online boutiques, credit cards are widely accepted for purchases made on the internet. They provide a secure and convenient way to shop online, and many credit cards also offer additional protections such as purchase protection and fraud detection for online transactions.
Credit cards are often used for booking flights, hotels, rental cars, and other travel-related expenses. Many credit cards offer travel rewards, such as airline miles or hotel points, which can be redeemed for free flights, hotel stays, or other travel perks. Some credit cards also offer travel insurance, providing added protection and peace of mind when you’re on the go.
Credit cards are commonly used for purchasing tickets to concerts, movies, sporting events, and other forms of entertainment. They also come in handy for booking hotel accommodations, dining at restaurants, and making other purchases while enjoying a night out or attending a special event.
Many utility companies, such as electricity, gas, and water providers, accept credit card payments for monthly bills. You can also use credit cards for paying recurring subscriptions, such as gym memberships, streaming services, and magazine subscriptions, providing a convenient way to manage ongoing expenses.
Credit cards can be a financial lifeline in emergencies or unexpected situations. They can be used to cover unplanned medical expenses, car repairs, or other incidental costs when you don’t have enough cash on hand. However, using credit cards responsibly and paying off the balance in full each month is essential to avoid high-interest charges and debt accumulation.
From online shopping to paying bills, credit cards offer convenience and ease. However, as much as credit cards can be a useful tool, they also pose a significant risk to your financial security. Credit card fraud and identity theft are rampant in today’s digital age, and it’s crucial to take steps to stay secure while using your credit card.
The first step to staying secure while using your credit card is to keep your card safe. Always keep your credit card in a secure place, such as a wallet or purse, and never leave it unattended. If you lose your credit card or it gets stolen, report it immediately to your bank or credit card company.
When shopping online, only use secure websites that encrypt your personal and financial information. Look for the padlock icon in your browser’s address bar, indicating that the website is secure. Avoid making purchases on public Wi-Fi networks, as hackers can easily hack them to use your data.
Regularly monitor your credit card account activity to ensure that there are no unauthorized charges. Sign up for alerts and notifications from your bank or credit card company to stay informed about your account activity. If you notice any suspicious activity, report it immediately.
Always use a strong password when setting up online accounts or logging into your bank or credit card account. Such a password must include a string, i.e. combination of alphabets, digits and special characters. Avoid using the same password for multiple accounts, and change your password regularly.
Your credit score is an essential factor that determines your creditworthiness and ability to access credit in the future. A credit score is a number that ranges from 300 to 850, with a higher score indicating a better credit history. One way to build your credit score is by using a credit card responsibly. Here are some tips on how to do that:
Using your credit card regularly and making payments on time shows that you are a responsible borrower. You must use your credit card for small purchases you can afford to pay off in full monthly. It will help you establish a positive credit history and improve your credit score.
One factor affecting your credit score is your credit utilization ratio, which is the amount of credit you are using compared to your credit limit. Keeping your credit card balance low and below 30% of your credit limit is an excellent way to improve your credit score.
Late payments can have a negative impact on your credit score. Pay your credit card bill on time each month to avoid late fees and negative marks on your credit report.
Applying for multiple credit cards within a short period of time can lower your credit score. Each time you apply for credit, it shows up on your credit report as a hard inquiry, which can have a negative impact on your credit score. Only apply for credit cards that you need and can manage responsibly.
Checking your credit report regularly can help you identify errors or inaccuracies that could be affecting your credit score. You are entitled to one free credit report per year from each major credit bureau. Review your credit report for accuracy and dispute any errors that you find.
In conclusion, credit cards can be a useful tool for managing your finances and building your credit score when used responsibly. By paying your balance in full every month, sticking to a budget, choosing the right card, keeping your credit utilization low, and using rewards wisely, you can avoid common pitfalls and use your credit card wisely. So next time you reach for your credit card, remember these tips to stay in control of your finances and avoid debt.
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It's generally recommended to have 2-3 credit cards to avoid overspending and keep track of your credit card usage.
To build your credit score with your credit card, you should make your payments on time each month and avoid carrying a high balance on your credit card.
You should be aware of the annual fee, late payment fee, over-the-limit fee, and cash advance fee when using your credit card.
If you lose your credit card or it gets stolen, you should immediately contact your credit card company to report it and freeze your card. It would help if you also kept a close eye on your account activity to ensure no fraudulent charges are made.
To avoid overspending with your credit card, you should set a budget and limit your credit card usage to purchases you can afford to pay off. Consider setting up alerts to notify you when you reach a certain spending limit.
If you can't make your credit card payments on time, you should contact your credit card company to discuss your options. You can set up a payment plan or negotiate a lower interest rate. However, it's essential to communicate with your credit card company as soon as possible to avoid further damage to your credit score.
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