Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
The outbreak of Covid-19 has had serious economic ramifications all over the world. Hence, it has become important to manage your finances judiciously including the use of your credit card. There are certain steps you must follow while using your credit card so that you can manage your finances in a proper manner.
Use your credit card to make purchases you feel are absolutely necessary. Keep a tab on your credit limit and your capability to clear the bill on time before using your card to make any purchase. Purchase your essentials within the amount range which you will be able to pay back on time.
Pay your credit card bills on time so that the bank does not charge any late payment fee on your outstanding amount. When you delay paying your credit card bill on time, your credit score also gets impacted negatively. Hence, use your card in a smart manner and pay your bills on time to avoid paying any penal charges.
If you are looking to apply for a credit card, do not apply for any credit card you come across. Conduct thorough research to find out whether the card is suitable for you based on your needs. For example, if you shop online frequently, then there are credit cards that offer cashback and other rewards on making purchases online. Hence, check the cashback and rewards along with fees and charges before applying for the credit card.
Most financial advisors will ask you to maintain your credit card utilisitation within 30% of your credit limit so that you can maintain a positive credit score. For example, if your credit limit is Rs.90,000, then you must not spend more than Rs.30,000 monthly. This is a thumb rule which you must follow and as the outbreak of coronavirus has created deep financial complications, it is important you use your card wisely so that your overall credit score continues to improve.
On using your credit card, you accumulate reward points that you can redeem later. You can check the reward points you have accumulated and if applicable, redeem them which will help you save a lot of money. Keep an eye on not only the reward points accumulated by you but also the expiry date and try to redeem them within that period.
As per the directive by the Reserve Bank of India, credit card users can avail moratorium where they can defer the payment of their credit card bill. However, this is an option you must avail only if you are facing a severe financial crunch. The moratorium period ensures your credit score does not get negatively impacted, however, you will continue to accrue the interest rate charged by the bank on your outstanding amount. Hence, once the moratorium is over, you will be asked to pay more than what you had spent earlier. Hence, avail the moratorium option only if you are finding it difficult to take care of your other finances and would prefer deferring the payment of your credit card bills for some time.
Hence, these are some steps that you can follow while using your credit card during the Covid-19 crisis. Do compare the various credit cards offered by different banks before applying for the one you feel is suitable. Use your card in a manner where you are sure about clearing your bill on time, without facing any financial crunch.
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