Credit cards can be considered as one of the fastest ways to make purchases without worrying about a cash crunch. According to the TransUnion CIBIL Industry Insights Report for Q3 2018, the number of consumers with access to a bank card reached an all-time high of 36.9 million in Q3 2018 and has grown by 31.7 percent year-on-year (YoY).
With this growing demand, lenders are keen to offer credit cards to consumers. Credit card isn’t just plastic in your pocket — it ensures you have access to credit at your fingertips, especially in case of an emergency. Prompt payments and careful usage will positively impact your CIBIL Score over time. By increasing the credit limit lenders reward credit-conscious consumers thus enabling you to make your financial goals come true at the swipe of a card.
Any late or missed payments on your credit card bill can incur late payment fees and impact your CIBIL Score, in turn affecting your access to future credit when you need it. Here are four steps given by Free Financial Assistance Advisory Portal, MoneyMindz to ensure that you get the most out of your credit card while safeguarding your CIBIL Score:
1. Choose the right type of credit card – While you may be readily offered different cards, choose the one that suits your requirements. How often would you use a co-branded reward card? Too many credit cards add to your credit exposure/credit burden and will impact your credit score. Instead of opting for multiple cards, choose one or two cards that will limit your credit exposure and accumulate points every time you make a transaction.
2. Consider the credit utilisation limit – The lender will carefully assess your repayment ability before ascertaining your utilisation limit. However, ensure you apply your own filters and choose a card and a limit suitable to your income and repayment capability. Restricting your overall credit card spend to 30 percent of your credit utilisation limit is considered a healthy ratio. On the other hand, over-leveraging your credit utilisation limits is a strict no-no as this impacts your credit score.
3. Plan, purchase and forecast card expenses – It’s a good idea to decide which of your monthly purchases would be made with a credit card. Forecasting card expenses is also important to achieve your financial goals. Factor in any upcoming large-ticket purchases like gadgets or home appliances. Before using your credit card, consider whether you would like to opt for a consumer durable loan depending upon the interest rate. Though different lenders will have different interest rates, these are comparatively lower to the rate of interest on credit card balances. This will also help you maintain your credit card limit which you can utilize in case of an emergency.
4. Check for promotional emails and messages from your credit card provider – Lenders announce special offers, rates and cash back, especially during festivals and public holidays. With a bit of homework, smart planning and advance booking you can save some money with your credit card. Smart use of your credit card will help you build a good credit footprint as long as you are responsible and remember to repay the full amount on time.
For more information visit www.moneymindz.com or give a missed call to 022-62116588
For more information visit:
To Get Personal Finance Information From Certified Financial Planners: