Business News Desk – Most people will remember their first credit card experience very well that using it without thinking can lead you into a debt trap. In such a situation, if you understand how much money you earn and how much you spend. Then set a limit on your expenses, then you can benefit from a credit card.
First condition- look at income, debt and savings target, decide on spending limit- Before using a credit card, assess your income, expenditure, debt and savings target. This will help you decide on spending limit and take financial decisions. Remember, credit limit is not a true indicator of your spending capacity. Suppose, you earn 1 lakh per month. Savings are 35 thousand and household expenses are 45 thousand. That means 20 thousand rupees are saved. Keeping in mind the 50-day interest-free period on the credit card, you make a purchase of 30 thousand.
You will pay it easily. But if you repeat this process for 3 months in a row, then in the fourth month you will be short of 10 thousand. That is, you should make only as many purchases as you have surplus. Look for cashbacks, rewards and promotions that match your purchases. It is important to understand that the main benefit of a credit card is not an increase in spending limits. You should strategically look for cashbacks, rewards programs and promotions that match your spending pattern. This can help you get rewards, discounts and promotional benefits. These benefits can range from 2-6%.
In case of an emergency, prevent the outstanding amount from mounting with options like Balance Forward, EMI-
Pay credit card bills on time to build a strong credit history. In case of an emergency, a balance forward plan is a better way to prevent the outstanding amount from increasing month after month. Converting the bill into EMI is also a good strategy.
Make it a habit to look at credit card statements, it can help you improve your spending- Look at credit card statements to understand your spending habits. Note them down. This will make you aware of your spending and you can reduce unnecessary spending. This approach will help you make the right financial decisions and get the most out of your credit card.
