Using your credit card wisely can help boost your finances

We often hear that credit cards lead owners to debt. However, due to financial discipline, not credit cards in their own right, users incur high fines and financial costs and fall into debt traps. When used well, credit cards can be a tool for building your credit profile and saving money.

In this article, we’ll look at how you can improve your finances if you use your credit card wisely.

Creating a credit score: Transactions made through a credit card are similar to available loans. The credit card issuer reports the credit card transaction to the credit bureau. The credit bureau uses this information to calculate your credit score. However, unlike loans, credit card users do not pay interest on transactions as long as they pay the dues by the due date. In this way, you can properly use your credit card to build your credit score. 

Sachin Vasudev, Associate Director and Head Credit Card at Paisabazaar.com, said: Therefore, people with a high credit score are more likely to get a loan or credit card approval. Many lenders also offer preferential interest rates to applicants with high credit scores. “

Fiscal spending by EMI: The credit card issuer allows the card user an equivalent monthly installment (EMI) conversion feature for certain transactions that exceed the threshold limit, or for all or part of the bill. This option is useful if you are unable to repay the full credit card bill by the due date. It is also useful for those who are unable to make the inherently high spending due to lack of repayment capacity. EMI conversion options typically have a loan term of 6 to 60 months, and cardholders can choose the loan term depending on their repayment capacity.

Vasudev said: “Credit card issuers work with a variety of manufacturers and merchants to provide low-interest or interest-free EMI facilities for services and products. For such free EMI, merchants / service providers It bears the entire interest expense component of the EMI Facility. Card users must reimburse the EMI purchase price and the GST expense incurred by the EMI interest component. “

Savings with card benefits: Credit card issuers seek to attract card users to more transactions by offering reward points, discounts, vouchers, cashback, etc. for transactions. You can get the most out of these benefits by choosing the card whose reward point structure and benefits best match your lifestyle and spending pattern.

Adhil Shetty, CEO of BankBazaar.com, said: In this way, it allows borrowers to ponder their costs and manage them to minimize costs and maximize rewards. For example, you can get a 5% cashback by paying utility bills via credit card, so this way you can get a small discount every time you pay an invoice. In this way, you can accumulate reward points that you can use later to pay your invoice. “

In addition, many credit cards offer users multiple lifestyle benefits, including free lounge access and free club membership.

 Source INR