Credit cards are increasingly becoming popular in India owing to the plethora of benefits and conveniences they offer. However if not used wisely, a credit card can impact your credit score badly and you may face a problem while applying for loans in future. To help you use your credit cards in the best way possible and maintain a good credit score, we’ve enlisted some of the important things that you should keep in mind:-
1. Make full payments on time: Always pay your credit card EMIs on time and do make a full payment every time no matter what. This simple practice will benefit you in the long run. Not only it will improve your credit score but banks will find you an eligible borrower.
2. Stay below your credit card limit: Just because a credit card gives you the convenience to spend as per your wish, doesn’t mean you’ll overspend and exhaust your credit card limit. Your bank will charge a fee for it and increase your interest to a higher penalty rate. To avoid this, it is better you use your credit card wisely.
3. Keep a track of your spending: Always keep track of your spending so that you can have a clear idea of how much you have spent. This simple practice will keep your expenses in control and you will never be worried about paying higher EMIs that are out of your budget.
4. Set a sensible credit limit: Your credit limit should be an amount that you can easily repay (neither too less nor too high) and one that won't tempt you to spend more than you can afford. You can also ask the bank to decrease or increase your credit card limit anytime you want depending on your budget.
5. Check your credit card statement regularly: To keep a track of your monthly expenses done using credit card HDFC or any other, you should check your credit card statement carefully. The best way to do this is by keeping all of your credit card receipts each month, and tick them off against the charges on your credit card statement. This will also help you check that you have been charged the right amount and that you have not been charged for anything you did not buy.
6. Close your credit card properly: There's more to closing a credit card account than just stop using it. Banks have fixed certain criteria to cancel a credit card that you need to follow.
7. Treat your credit card like a debit card: While spending from a debit card you think twice because it’s your hard-earned money that you have been saving for long. Develop the same feeling for your credit card as well. The expenses you make from it will be paid by you only. So think sensibly and spend accordingly.
8. Use store card wisely: Retailers offer good discounts, cash back offers and other exclusive offers on different credit cards HDFC, ICICI, SBI, etc. But before you get swayed away from such tempting deals, you must think twice and only purchase those items or costumes that seem important to you. Also check the terms and conditions carefully to make sure any potential savings you might earn won't be eaten away by fees and charges.
The Bottom Line: These are quite a few significant factors that you must keep in mind to use your credit card wisely. One word of advice: Never take out cash advance from your credit card. It may help you in crisis but with time you’ll end up accumulating more debt at higher interest rate. Instead, increase your savings buffer that will help you easily sail through life's rainy days so you don't have to rely on your credit card. To apply for credit card from HDFC or any other bank, you can visit the official banks website.