It is a hard time for all of us to face such situations where we have to encounter a lot of problems. It can be related to health, education, livelihood, monetary, etc. But to survive, we need to take steps cautiously so that it won’t hamper you and your family. You may have a small bank balance but that won’t be enough to cope up in the long run. But if banks and financial institutes provide a small amount of credit to you that would be helpful for you. Hence the credit cards are the best option for you to use in this pandemic situation. So this article will explain some points to remember while using your credit card and also how to Apply for Credit Card?
Consider the Facts When Using Your Credit Card
Having a credit card in COVID will definitely help you to be financially stable. But remember its a borrowed money from the bank that you need to repay later. So, before making any purchase keep these pros and cons of using a Credit Card.
Don’t use more than two Credit Cards
According to the experts, it is advisable not to use more than 2 credit cards. As It will hamper your credit score. There are multiple banks and financial institutes that are eagerly waiting for customers with good credit scores. To provide with a new credit card. Opting for multiple new credit cards shows credit hungriness. Also, multiple hard inquiries on your credit report reduce your CIBIL score.
Avoid conversion of due amount to EMIs
If you buy anything pricey, banks will offer you the option of converting it to EMIs. It is not recommended to convert it to EMIs. You may end yourself paying more than you intended to pay. The bank charges an additional fee in addition to the interest rate. Your credit limit will be restricted.
Use your reward points properly
Many credit cards give reward points for transactions. These reward points can be used to pay for items. You can use reward points to pay off your due amount. Keep a regular check of your reward points before they expire.
Proper utilization of Credit Cards improves CIBIL score
If you use your Credit Card properly and maintain the timely payment of your dues it will help you build your credit score. Moreover, if your credit score is high and in the range of 750-900, you can avail of the loan easily from the bank. A good credit score reflects you are aware of your financial habit.
Maintain credit utilization ratio less than 40%
Always remember not to overburden yourself with credits. As it will affect your credit score. So it is advisable not to over-utilize your credit limit. Maintain a credit utilization ratio of less than 40%. If you exceed your credit limit you need to pay extra charges to the bank.
Variety Of Credit Cards Available
There are many credit cards available, and each credit card is ideal for a particular group of people. In addition to your normal bank-issued credit card, here are a few more common credit card variations
Reward Credit cards
These cards provide refunds, invoice credits, or rewards redeemable for flights and hotel stays to cardholders. You may not be eligible to secure the most lucrative cards right first, but if you utilize your first card carefully, you should ultimately be able to qualify for better, more rewarding cards. This is the greatest Card to have.
Secured credit cards
Secured credit cards, unlike regular credit cards, are intended for risky customers and need the authorization of a security deposit. You’ll put down a deposit that will serve as your credit limit. Secured credit card payments, like unsecured credit card transactions, are disclosed to credit bureaus, making them a convenient method to build credit.
Charge cards
These cards are similar to regular credit cards in that they do not have a defined credit limit, but you will still be limited in how much you may charge on the card at any given moment. You cannot, however, carry debt from month to month and must pay your statement balance in full by the due date.
Get familiar with Credit Card Terms
To completely appreciate how credit cards function also pros and cons of using a Credit Card before you apply for a Credit Card. you need to get familiarized with the following terms of credit cards. This includes the Credit limit, Balance, available credit, billing cycle, the due date for the statement, minimum payment, and Annual Percentage Rate.
Read Also: Credit Cards Vs Personal Loans
