5 Good Credit Card Habits That Every User Should Adopt

Credit cards are financial tools that help you increase your purchasing power when used responsibly. Many times when using their credit card people tend to act carelessly and get caught in a troublesome situation. However, it may cause financial concern if not used appropriately. Here are some credit card habits that you should adopt as a cardholder. 

#1 Make Full Payment of your Outstanding Dues  

Paying your outstanding dues on time is one of the most important habits that you can adopt as it not only helps you avoid interest and other late payment fee charges on your credit card but also help you increase your credit score. Paying your credit card bills on time will help you increase your credit score that will only make it easier for you to avail credit in the future. The payment history of an applicant constitutes 35% of the credit score of the individual.

One of the common credit card myths is that by paying your minimum amount due you can avoid interest. It is a hoax, by paying your minimum amount due you are not charged with any interest on the minimum amount paid but you are charged with interest on the outstanding amount 

Therefore, it is recommended to pay your outstanding credit card dues on time. 

#2 Reviewing your Credit Card Statements

You should always keep a track of the transactions made using your credit card at regular intervals. It will assist you in making a more accurate appraisal of your spending. It may also help you detect any unrecognized transactions on your credit card account. 

Moreover, It will allow you to keep track of your finances and avoid any unnecessary spendings on your credit card. In addition to this, some transactions may appear twice on your statement, and there may be calculation errors (though these are rare), which can only be corrected if you examine your statements.

Also Read - How To Manage A Credit Card On A Low Income?

#3 Using your Reward Points Strategically

Another smart habit that you can develop is to use your credit card wisely. If you have a credit card that offers reward points for purchases, you should understand how to get the most out of it. Firstly, choose a credit card based on your spendings, as different credit cards offer different levels of benefits across various categories. As a result, you must choose the one that is most advantageous in a category where you enjoy spending the most. Furthermore, you should use caution while redeeming reward points by considering all of the choices for redemption as well as the worth of the reward points. Redeem your earned points for a category that is both valuable to you and delivers the highest reward point value.

#4 Avoid Cash Withdrawals

It is never a good idea to make cash withdrawals using your credit card. As the customers are charged with interest along with a cash advance fee by the banks. Normally, banks tend to charge a cash advance fee of 2.5% from the customers. In addition to this, the cardholders are also charged interest levied on the withdrawal amount. Bank does not offer any interest-free period on cash advances. The interest charged on cash advances is higher than the interest charged on credit cards. 

#5 Maintain a Low Credit Utilization Ratio

You are not recommended to use your credit card's entire credit limit every month. You should only use only 30% or less of your overall credit limit. If you use your credit card to its maximum, your card issuer may view you as a risky borrower and lower your credit limit. Furthermore, because your credit utilization ratio constitutes upto 30% of your Credit score, it will have an impact on your credit score. If you have a card with a low credit limit, you should either try to increase the credit limit on that card or get a new card with a greater limit.

Bottomline

To summarize, these are some good credit card habits that you can adopt to use your credit card responsibly. You can be a responsible user by following all of the above-mentioned steps to make your credit card experience more rewarding and fulfilling. One important thing to remember before applying for a credit card is to compare credit cards online to get yourself the best deal.