Credit Cards come with multiple advantages that can help you save on costs and enhance your lifestyle. However, to reap the full benefit, you need to follow some best practices of card usage. Underutilising your card, and paying only the minimum balance, for instance, are two habits that prevent you from making the best of your card. So, get savvy about the seven cardinal Credit Card rules.
Top 7 Credit Card rules
1. Choose the right card
Your choice of Credit Cards must align with your lifestyle needs and spending habits. For instance, if you travel extensively, go for a travel card. If your petrol bill is massive, go for a fuel card. If you love shopping at a specific retail store, opt for a co-branded retail card. Choosing the right card enables savings, discounts, and exclusive deals as per your spending habits.
2. Align your credit limit with cash flows
Though your credit limit is determined by the card issuer based on your credit score, income bracket, and repayment history, consumers are allowed to progressively increase your limit. The best practice is to ensure that your credit limit aligns with your cash flows, so you do not shop beyond your means. Start with a smaller limit and grow it as your income grows.
3. Redeem your rewards
Credit Cards come with attractive loyalty programmes. However, many consumers forget to redeem their reward points in exchange for curated products, air miles, or gift vouchers. Remember, redeemed rewards translate to money saved and an elevated lifestyle. You can check your rewards via net banking, or on your monthly statement, and redeem them before they expire.
Also Read: How to get a Credit Card in 3 easy steps
4. Put all spending on your Credit Card
The more you use your Credit Card , the more is the promise of rewards and cashback. Hence, try and put your fixed monthly expenses, big-ticket spends, and other expenditures on your Credit Cards. Of course, stay within your budget and do not spend beyond your means.
5. Keep building your credit score
Your credit score, ranging from 300 to 900, is a numerical representation of your creditworthiness. Of this, 700 is considered to be a good score, while 800 and above is excellent. As your score increases, you become eligible for superior loan and Credit Card products, with better perks and lower interest rates.
To enhance your score, pay your bills on time and avoid late fees. Avoid paying only the minimum amount, as you will then be charged a higher rate of interest on the outstanding amount. The best way to ensure on-time payments is to automate your monthly Credit Card payments.
6. Regulate credit utilisation ratio
Another factor to consider is your credit utilisation ratio i.e. the ratio of your current Credit Card outstanding balance to your credit limits. The ideal ratio is considered to be 30%. If the ratio is consistently lower than the ideal, then it means you are underutilising your card. If it exceeds the ratio regularly, it means you are overly dependent on your card. Both scenarios can result in a lower credit score .
7. Leverage Credit Card EMIs
Many consumers are unaware of the Credit Card EMI facility, where you can split a lump sum payment into smaller monthly payments, at the point of sale. This facility gives you the convenience of making payments as per your monthly cash flows. Choose the tenure, interest rate, and EMI as per your needs, get approval and proceed to make the purchase.
Also Read: Demystifying Credit Cards: How do Credit Cards work in India
Conclusion
By following smart Credit Card rules you can enhance your credit score and get access to better credit products. Axis Bank offers a range of Credit Cards that are perfect for a spectrum of consumer needs and lifestyles. Identify the right one for your specific needs, apply online, and access the video KYC to expedite the activation process.
Also explore a collection of co-branded cards available for your favourite retail stores, airlines, and other brands. Your Credit Card makes you eligible for a loyalty programme, fuel waivers, dining and shopping deals, and perks like free airport lounge access.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
