First Time Credit Card Users to note

Source: The Hitavada      Date: 30 Oct 2017 12:09:33


If you are using a Credit Card for the first time, always try to use its distinctive features to maximise the advantages.

If you are the first-time Credit Card user, then huge financial benefits may not be far away. Credit Cards help you learn financial discipline while giving you the advantage of getting interest free usage of the amount spent for 17 to 52 days. But that is not enough and here we discuss many more benefits of using a Credit Card prudently.

Travel With Less Cash In The Wallet
Credit Card acceptance has increased significantly after last year’s demonetisation exercise. If you possess a Credit Card, then you can use it to pay at fuel stations, grocery shops, school fees, travel bookings, regular bills payments, etc. So, you can easily reduce the cash amount in your wallet and instead carry the Credit Card always. By using the Credit Card, you can maintain a much higher liquidity and get leverage on your finances during an interest-free credit period.

Keep Track Of Your Expenses
Credit Card is a spending instrument. When you make a cash expenditure, it becomes tedious to remember all small spendings. However, in the case of Credit Cards you get a monthly statement detailing all your expenditures helping you to analyse your spending patterns. Most Credit Card users consider this to be a very helpful tool in cutting down on unnecessary expenditure.

Support During Financial Emergencies
There are situations when your salary may get delayed for some reason and you may not have sufficient cash reserves to pay-off regular requirements. During such short-term financial emergencies, a Credit Card can be your most reliable saviour since you can also use it as an ATM to withdraw cash. However, it is important to note here that using the Credit Card to withdraw cash is charged with hefty interest from the day you take out money. So, you must refrain from using the Credit Card for withdrawing money, unless you are in a deep financial mess.

Build Your Credit Score
There are people who would have never used a debt instrument such as a bank Loan. In such scenarios, their Credit Score is normally ‘zero’ i.e. no credit information available for them. If you want to get a loan without a credit history, then you may find it difficult to prove your credit worthiness. By using a Credit Card, your Credit Score builds-up over time, provided you repay the outstanding amount before the due date and do not default in repayment. Long term disciplined use of Credit Card reflects your credit worthiness and it may help you to get higher Credit Score and attractive loan offers from top lending institutions.

Facilities, Offers And Discounts
While buying things on cash payment, you may miss several offers and discounts, which are exclusively available on purchase through a Credit Card. Retailers and merchandise have an exclusive tie-up with a specific Credit Card companies and if you buy things from such stores, then you may get cash back benefits, discounts or reward points to be redeemed later. Similarly, Credit Card companies also offer big benefits to the customers on online shopping from time to time. For example, during the festive period some card company allows EMI with zero processing charge and zero interest rate.

Credit Cards can make your spending convenient, safer and enjoyable, but you must quickly adapt to an appropriate usage pattern. Never rush to exhaust the card limit when you use it for the first time. Learn the benefits of Credit Cards slowly and use it as per your requirements. Do not exceed the credit utilisation ratio over 30% when using the Credit Card, if you think you need more limit, then you can request to the card company for limit enhancement or you can apply for another Credit Card from another company. If you take a little care while using the Credit Card, then it can give you huge benefits in the long term.