7 Best Credit Card Tips| North Loop Official Blog
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24 Nov 2020

7 Best Credit Card Tips

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Introduction -

Credit cards get considered as coveted financial instruments as they play a vital role during financial emergencies. Their ability to fulfil sudden monetary requirements makes them one of the best tools in your financial toolbox.

Not only do they help in boosting your purchasing power, but also provide the benefits of leaving home unburdened by cash, getting rewards on purchases, and at the same time building up your credit score. From everyday activities like purchase of household supplies to making high-value transactions like buying jewellery, travel tickets etc. credit cards offer the utmost convenience and financial advantage.

However, all that convenience does come with its problems and responsibilities. If not used in the right way, credit cards can become the source of debt troubles. That is why it is crucial to know their role in your financial life and also understand how to use credit cards wisely and effectively. By following the best practices, you can avoid the downside of credit cards and at the same time, help it to build your wealth and get better loan terms. In this article, we will talk about the seven best credit card tips that involve how to use credit cards wisely and efficiently.

Seven credit card tips -

Pay Attention to Total Monthly Debt Payments - Most experts suggest that your total monthly debt payments like car loans, student loans, credit card payments etc. should not add up to more than one-third of your total income. That is the reason you should pay close attention to the monthly debt values and reduce your use of credit card accordingly. Getting burdened with more debt than you can handle, can endanger your financial stability as well as your long-term goals such as retirement planning or savings for your child’s higher education.

Check your credit reports regularly -Since your credit score and history reflect your ability to borrow, you should keep a regular check on your credit reports. It is also necessary to review it yearly to look for any errors. Credit reports focus on a variety of factors such as whether you pay your bills on time or not, the type of credit you use, and the number of credit inquiries you have initiated. Since many different transactions get involved, it is possible to have errors in any of the above information. Keeping a regular check can help you prevent these errors from lowering your credit score or denying you the availability of attractive interest rates.

Pay on time and avoid closing cards you do not use - You may think that only actions like missing a payment or carrying a large balance can damage your credit score. However, in reality, there are a variety of other factors involved. One such other aspect of a low credit score is cancelling older cards. According to experts, lenders keep an eye on your credit history and the longer it is, the better. Since closing down a card you do not use often lowers the ratio of available credit to the amount of credit you are currently using, it has the potential to skew your credit ratio and make you appear like an unreliable and risky borrower.

Read the policy agreements -It is essential to know that all credit cards do not get created equal. While some of them charge annual fees, others charge for balance transfers, cash advances, exceeding credit limit etc. Therefore, it gets recommended to read and understand the issuer’s credit card policy agreement and choose one that best suits you. For example, you should choose a card with rates and fee structures that match your expected purchasing or repayment behaviour. Also, looking for when your interest rate might increase, overseas transaction charges, and other actions that carry fees can help you pick out the best credit card as per your needs.

Use cards safely -The use of credit cards is endless, but it is necessary to do it safely. With most industries going digital all across the globe, the risks of credit card frauds and thefts have become higher. Therefore, it has become crucial to get proactive and use cards responsibly. The risks can get reduced significantly by reviewing monthly card statements and checking online accounts more frequently. Experts state that fraud prevention works best if you stay vigilant and keep your receipts to compare them regularly with monthly statements, report a lost or stolen card immediately and take other necessary measures to remain proactive.

Maximise rewards - Choosing cards that offer cash rewards can help you save more. There are various types of credit card rewards such as points towards merchandise, airline miles, access to an airport lounge, free entry to exclusive clubs etc. Maximising your rewards while spending money can be beneficial and help you accomplish a few of your financial goals.

Pay off balances strategically -Even though it is essential to make at least minimum payments on all your debt to keep your credit score stable, creating a strategy to pay off higher interest rate cards first can help you save money over time.

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Conclusion -

Since credit cards can have a rather significant impact on your financial goals, taking time to consider different credit cards and weighing in on their usage in terms of your budget, overall debt and other financial priorities get recommended. It can help you utilise the instrument to your advantage. You can also read our article about the best credit cards available in UAE and India.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.