Opening the envelope that holds your new credit card is always exciting. Your credit card allows you to make necessary purchases on hold due to financial trouble. You need not wait a long time to save money and then fulfil your desires or meet instant money requirements with your savings.
You may be tempted to check your sign-up bonus and run out to start using it, but before you put your credit card in your wallet, you must take a few minutes to ensure everything is properly set up.
If you are new to a credit card or have upgraded it to get more rewards and benefits, follow these simple steps to utilise it smartly:
1. Understand the Terms and Charges
A credit card comes with a document welcoming you and containing information and features of your card. You need not pore over every word, but it is necessary to review some key points to understand the basic terms related to credit cards and fees. Some of these are as follows:
- Cash advance fee: A credit card allows you to withdraw cash, called a cash advance facility. This facility is offered against a fee. Check what the bank will charge.
- Annual fee: A credit card may charge you an annual fee. You should know what and when you will be charged.
- Annual APR (Annual Percentage Rate): Banks charge APR on the outstanding credit card amount the consumer carries over months. You should also check the balance transfer APR, the cash advance APR, and the penalty APR.
- Returned payment fee: You can choose to automate the credit card bill payments, and you need to maintain sufficient funds to make those payments every month. Insufficient funds will lead to declined payment and returned payment or bounce fee.
- Balance transfer fee: Credit cards come with a facility for the balance transfer. If you find that you are paying high interest on your credit card and want to switch to a new bank charging a lower interest rate, you need to pay a fee. Check at what percentage the bank charges it.
2. Activate Your card
You need to activate your credit card to start using it. It is an easy process. You can find a sticker on the instructions leaf sent with the card. Follow those steps to activate the card.
You can log in to your bank account through the net banking ID to activate your card. After requesting activation, you will receive an OTP on your registered mobile number from the bank. Authenticate your card details asked during the process and enter OTP to set your card PIN. The bank will activate your card. You can use an ATM also to activate your credit card.
Alternatively, you need to make a call to the given number on the instruction leaf. The executive will ask you to authenticate your card and personal details and activate your card.
3. Know your Credit Limit and Plan Expenses Accordingly
First is the set credit limit on your card. Check what the maximum credit limit is. You should aim to restrict your credit usage. Experts suggest using 30% or less of your limit because the credit utilisation ratio is a key factor for banks in determining your credit score. Keep it low to gain more credit facilities from your bank.
4. Learn about Grace Period to Save Efficiently
Among several advantages of credit card, a grace period is the most considerable. Banks give a grace period to credit card users to pay the bill. It is the period between the day a billing cycle ends and the due date of bill payment, typically about 21 days. There will be no interest in your balance during this grace period.
5. Know Your Rewards Program and Sign Up if Required.
New credit cards can offer you exciting reward programs and cashback offers. You can earn significant reward points by swiping your card for even small purchases within a stipulated time. The bank may require you to register to start earning rewards. You should check if there are certain purchases that can offer you rewards. Check what categories allow you to earn cashback.
Another most important thing for credit card users is paying credit card bills on time to avoid any late payment fees or accruing interest and stay away from accumulating debts. Automatic bill payments can be a lifesaver. It helps you to not miss a payment and build a good credit score, especially if you are just started with credit. Even if you are disciplined in treating your debts, experts suggest choosing the autopay option for your credit card bills.
Thus, be an informed consumer to take the most advantages of credit cards and keep fulfilling your financial requirements by using your credit card in a smart way. Check this if can you get a credit card without a job.