In the last few years, India has embraced plastic money and digital payments at quite a fast pace. Today, more people also have credit cards than earlier. However, people are still wary when it comes to using a credit card. This is mostly because people are unaware of the benefits you get by using a credit card.
If used wisely, a credit card gives you way more than the amount you end up paying as the joining fee or the annual fee. And using it wisely doesn’t just involve paying your bills in full and on time. To help you understand just how to go about making the most of your card, here’s how you can maximise the benefits on your card.
Choose the Right Card
Maximising benefits all starts with using the right card. This doesn’t mean that a credit card issued by one bank is better than that issued by another. What it means is that the card you ultimately choose should complement your spending pattern. This is the best way to earn as many rewards points as possible or the highest cashback.
For instance, if you spend a major part of your monthly income on online shopping, consider a credit card which lets you earn the most on these spends. This means that a card which rewards grocery spends made at grocery stores more than it does online shopping isn’t the right card for you.
If you have one card, this is the way to go. But if you have multiple cards, use each card to spend on categories they are best suited to. So, if you are buying groceries, use a card that rewards grocery spends and if you are dining, use a card that rewards dining expenditure.
Use Your Card
It’s all well and good to own a credit card or two, but it is of no use if you decide to use them occasionally. To truly maximise the benefits on your credit card, you should use it often and preferably for all your spending.
This means that you shouldn’t use your card just for the occasional purchase, but use it to pay utility bills, your online subscriptions, your food orders, and the like. This will benefit you in two ways. One, each transaction gives you that many more opportunities to earn points, air miles, or cashback. More points mean that you can redeem them that much faster. Similarly, with air miles and cashback. All of these rewards can be earned much faster when you use your card on a daily basis.
Make Use of the Interest-Free Period
All credit cards come with an interest-free period which can be anywhere from 20 to 55 days depending on the type of card you have. The longer the interest-free period, the easier it is for you to get enough money to pay the bill on the payment due date.
How does this work?
Well, let’s say that your credit card statement is generated on the 15th of each month and your payment due date is on the 10th of the following month. Let’s also say that you plan to make a big-ticket purchase. Now, if you make the purchase on the 17th of the current month, you will have 54 days to repay the amount (assuming the current month has 31 days and the following month has 30 days). If, however, you make this purchase one day before the date that your statement is generated (i.e., 14th), you have only 26 days to repay the amount.
So, knowing when your statement is generated and your payment due date goes a long way in helping you make the best use of the interest-free period on your card.
Utilise Your Reward Points
There is no point in accumulating rewards if you don’t use your points. At all times, be aware of how many points you have and their validity. Letting points lapse is as good as leaving money on the table.
That being said, make sure you use your points wisely. The ideal thing to do is to look at the credit card rewards catalogue and determine which product or voucher you want. Once that’s done, collect enough points to redeem that product.
The other smart thing to do with points is to transfer them to the hotel loyalty programme of any participating hotel or to an airline’s frequent flyer programme. This way you can use your points for a free stay or for a free flight ticket as the case may be.
Make Use of the Perks
Apart from the rewards that you earn each time you use your card, credit cards also come with numerous perks. Depending on the type of card you have, these perks can range from complimentary access to airport lounges to a free meal at a high-end restaurant.
All of the perks do have a few conditions you will have to fulfil before they are applicable, but these conditions are almost always easy to adhere to. Even if you have to spend a minimum amount to be eligible for these perks, you will realise that the benefits far outweigh the cost.
A good rule of thumb is to go through the terms and conditions that come with your card and see what exactly your card has to offer.
Take Advantage of Offers
No matter what type of credit card you own, one thing is for sure, there will always be a number of deals and offers on your card. These could be coupon codes you can use to save on a purchase or even an offer that entitles you to a free appetizer at a restaurant.
It is difficult to keep track of offers since they change quite often. To simplify this, you can check BankBazaar’s webpage on credit card offers. The page has updated information on current credit card offers that you can take advantage of.
Don’t Use It to Withdraw Money
One of the “benefits” of a credit card is that you can use it to withdraw money. This is known as a cash advance. The truth is that if you truly want to make the best use of your card, you should not take a cash advance. This is because you will be charged interest (independent of the interest you will be charged for retail spends) from the moment you withdraw money until you repay it.
If you do need cash, your best bet is to take a personal loan since it will prove to be cheaper. Especially, if you are looking for a large amount.
These are just 7 simple ways by which you can maximise the benefits you get from your credit card. But these are by no means the only way. As you use your card and get familiar with it, you will realise that your card comes with certain unique benefits (like an annual fee waiver). So, a good rule of thumb when you get your card is to go through the terms and conditions with a fine-tooth comb. It will take time, but once you start reaping the benefits, you will realise that the time spent was worth it.