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Who does not love a credit card? It is the best way to manage your finances during a cash crunch. It enables you to purchase goods and services from a predefined credit card limit without worrying about not having cash. You can get the best credit card that comes with numerous rewards, cashback, and bonuses. However, the catch is that you will have to use your credit card wisely. If you miss credit card bill payments, you will have to incur hefty interest charges and other penalties. 

Follow the underlying tips to cultivate the knack of using your credit card wisely:

Pay Your Credit Card Bills On Time 

Many credit card users ignore or forget to make on-time payments. It is worth noting that if you miss your credit card bill payment, you will have to bear a high interest rate on outstanding balances. Furthermore, if you do not pay your balances on time, the interest rate increases, and you will have a lot to repay. Besides, it will harm your credit score.

Keep a Low Credit Utilization Ratio

It would be wise to keep your credit card balance below 40% of your credit limit. Carrying a higher credit card balance negatively affects your credit score. For instance, if your credit utilization ratio is more than 50%, your credit score will significantly drop. Also, if you carry your balance from one month to another, the interest rate increases. 

Pay More Than Minimum Amount Due

Every credit card allows you to make the minimum payment to avoid interest charges. It makes sense when you do not have a sufficient balance in your account. But, you will need to pay your credit card bills in full in your wish to avoid high-interest rates. If you are unable to pay in full, make sure to pay more than the minimum amount due. 

Do Not Withdraw Cash From Any ATM

Your credit card allows you to withdraw cash from ATMs, but you should avoid it. Withdrawing money using your credit card attracts hefty interest charges. The interest rate keeps accumulating until you make the payment in full. So, do not go for cash withdrawal unless necessary.

Prioritize Paying Your High-Interest Credit Cards

Having credit cards with high interest rates is an indication of bad debt. Make sure to pay them off first. You will have to be wise and create a strategy. You will need to have a proper plan and schedule your payments. Make a list of your debts and get rid of your high-interest debts first. 

Analyze The Promotional Offers 

At times, credit card companies lure customers with maximum rewards, bonuses, and cashback. You will always have to give something to get the other. So, make sure to carefully read the terms and conditions of your credit card offer before getting the best credit card for yourself. The goal is to avoid falling into a debt trap. 

Look For Joining And Renewal Fees

When you apply for the best credit card, you will have to pay a joining fee or renewal fee while renewing your card. While choosing your credit card, make sure that the joining and renewal fees are reasonable in comparison. Choose a credit card that offers fee reversal if you spend over a certain annual credit limit

Make Big-Ticket Purchases Only

Most of us get into the habit of using our credit cards for small purchases. Small purchases, if not checked, can increase over time, which you may struggle to repay. It would be wise to use your credit card to make big-ticket purchases only. This way, you can cater to your needs and pay your bills on time. 

Make Use Of Your Rewards

Most credit cards come with numerous reward programs. For instance, you can get gift vouchers and complimentary airport lounge access for using your credit card to make transactions. Use your credit card wisely to get the maximum rewards. You can later redeem your rewards in cash or kind. Make sure to pay your credit card bills on time if you wish to benefit from reward programs. But, if you cannot, apply for a credit card with low-interest charges.

Immediately Inform Your Bank If You Lose Your Credit Card

If you have lost your credit card, or it gets stolen, immediately call your issuing bank. Your bank will then block your credit card to mitigate the risk of unauthorized transactions. If you do not report your credit card missing, you may lose your money on your credit card. The worst part is that you will have to pay it back with interest, even though you did not make the transactions.

Shabbir Ahmad

Shabbir Ahmad is a freelance enthusiastic blogger & SEO expert. He is the founder of Shifted Magazine & Shifted News. He contributes to many authority blogs including porch, hackernoon & techcrunch.

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