Compare parameters such as interest rates, reward points structure, credit limit, annual fee, balance transfer option, and customer service satisfaction to arrive at a well-informed decision.
The first step to managing credit cards better is to choose the right credit card. Often, among newly salaried individuals, industry experts say, there is a trend to obtain multiple credit cards to claim maximum reward points. However, multiple credit cards can be more of a bane than a boon if you do not track your expenses and payment dates mindfully.
Gaurav Jalan, CEO and Founder – mPokket says, “One must understand and analyze the nature of their expenses before applying for a certain credit card. Different credit cards cater to different needs like shopping, flight booking, and dining amongst others.”
Other than that, according to Jalan one also needs to compare parameters such as interest rates, reward points structure, credit limit, annual fee, balance transfer option, and customer service satisfaction to arrive at a well-informed decision.
What most people don’t notice is, with a minimum repayment facility being conveniently available, it is easy to accumulate interest on unpaid credit, which may ultimately lead to a debt trap. Therefore to avoid a debt trap, ensure that you track your expenses and credit statements judiciously while being cautious of the payment date. On top of that, if you have multiple cards, it gets difficult to understand which card is supposed to be used for what purpose, so pre-assign your cards for certain categories of payments.
Credit card debt is still a debt. It is imperative to have a payment plan in place for every month. “One should prioritize bills based on factors such as interest rates, balance due, and utilization ratio, and see which option works best,” explains Jalan.
Also, according to experts, you should re-evaluate your credit card fees at least once a year. Tracking your expenses and repayment cycles will help you understand your spending pattern. Just because the charge made sense to you when you got the credit card doesn’t mean it would be the same after a year as well.
If you are struggling to pay your credit card bills, consider consolidating your debt with the help of a credit card balance transfer. Jalan points out, “Consolidating could make it easier to track and manage the bill while making it less expensive to pay off. This would only make sense if the bank borrower is transferring his/her balance to better rates of interest and benefits than their pending credit card dues.”
Having said that, do not hesitate to call the customer care helpline if you do not understand your credit card statement or you think you have been overcharged. Experts say often people don’t read the fine print and skip the portion about the underlying charge. Redeem your credit card cashback before they expire to derive the maximum benefit from your card.
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