How to make the most of your credit card
Blindly paying your bills on every due date? Get familiar with the rewards, perks, and lifestyle benefits that will best work for you.advertorial Updated: Feb 14, 2018 17:04 IST
A credit card can either be a boon or a bane. If you do not know how to use it smartly, it is better not to have one at all. Maybe it’s time to ask yourself: Are you really getting the best out of your card or are you just blindly paying your bills on every due date?
In this article, we will look into how a credit card user can get the maximum possible benefits out of the card.
Before applying for a credit card, do your research; compare credit cards and choose one that is ideal for your needs and lifestyle. Get familiar with the rewards, perks, and lifestyle benefits that will best work for you. For example, if your credit card mainly offers entertainment rewards but you do not enjoy watching movies, it will be of no use for you. On the other hand, if you are a frequent flyer, go for a credit card that offers travel-related perks, such as airfare discounts, lounge access, or has tie-ups with hotels, etc. Also, if you love to shop, then go for a card with shopping-related offers. The best policy is to match the rewards with your interests and apply for a credit card that best suits this policy.
Live in the lap of luxury
While most of us are aware of cashbacks and rewards, not many know that some credit cards can place you in the lap of luxury, and quite literally. Think exclusive access to VIP lounges, preferred seating on planes, and even complimentary dinners/lunches at 5-star hotels and other fine-dining perks. Apart from this, customers who use their credit cards at 5-star hotels will be entitled to a wide range of benefits, including complimentary room upgrade and access to ‘ Unlimited Happy Hours’ at various participating luxury bars and restaurants.
There are also many travel cards that offer exclusive perks to credit cardholders. This includes no foreign transaction fees, exclusive discounts on airfares, business class tickets at a discount, etc. And, you can’t beat this! In fact, many travel credit cards allow customers to travel in any airline at anytime with no blackout dates, and stay at any hotel. Some of the other offers include at least one free stay at a hotel, complimentary meals, etc.
So how do you know if you have access to these perks? Contact your credit card provider and first ask for the list of benefits and upgrades that you are entitled to. To be eligible for certain perks, you will have to go for a higher value credit card.
Make use of extended warranty, price protection
Did you know that many credit cards give you extend warranty that is more than that given by the manufacturer? So, take advantage of free warranty the next time you make a purchase. Apart from this, credit cardholders are eligible for a price protection policy, which means that if the price falls on an item you have purchased, you will be eligible for a refund.
Go for cashbacks
Cashbacks are the best way to get the best out of your credit card or in other words, ‘earn while you spend’. For example, you can avail 20% cashback on all Uber rides and the 10th ride free if the credit card is used to make payments. Another card offers up to 6% cashback on movie tickets, 5% cashback on utility and telephone bill payments. This way, you can actually earn and accumulate cashbacks. Take for example, you pay utility bills worth Rs.4,000, then the cashbackamount will be Rs.200. These kind of cashbacks are very advantageous because they help the user get the maximum out of a card on every single purchase that is made.
Claim all benefits without fail
There are a number of benefits that credit card companies offer and sometimes, customers may not know all of them. These offers are available all-year-round and all you have to do is contact the card provider to know what to claim for. Some of the benefits may include annual gifts such as exclusive homeware, furniture or other gifts. Some credit card providers also give customers a free stay at luxury resorts or hotels on an annual basis. So, don’t be afraid to ask for the benefits offered.
Use floating period to your advantage
If you buy at the beginning of the billing cycle, the benefits of the interest-free period can be enjoyed to the maximum. This basically means that you have 55 interest-free days, which is 30 days of float and a grace period of 25 days, until the next payment date.
For example, if you made a payment towards a medical bill with your credit card and have submitted the insurance claim for the same, the insurance company will reimburse the money even before your credit card bill arrives. This way, you have literally spent nothing from your pocket!
Opt for EMIs on credit cards
Many credit card providers now allow you to convert a higher purchase amount into a monthly EMI. Say for example, you make a purchase of Rs.24,000 and are unable to pay it fully in the next billing cycle, you can choose to convert it into an EMI. If you pay the same back in 6 months at an interest rate of 10%, you will only have to pay Rs.4,400 per month. This is a much better option than making the minimum payment because the interest rate is much lower when you choose to make payments as EMIs. The trick is to pay on time, even if it is just an EMI.
Don’t have too many credit cards
The best thing to do is not to have too many credit cards, but one or two credit cards, using which you make maximum purchases. This will help you earn more rewards and cashbacks, which will allow you to earn a higher rate of return on the credit card investment.
Apart from this, owning too many cards not only increases your chances of higher debt but also reduces the chances of optimising earnings on a credit card.
To sum it up, awareness is important. So know what benefits you are entitled to as a first step and then see how you can make the best use of it. Remember, a credit card can be a money-saving tool and also lift up your credit rating.
First Published: Nov 16, 2017 17:36 IST