From groceries to fuel, paying using a credit card is convenient. Apart from cashless transactions, credit card payment offers help you save and earn points. Flat discounts and cashback from renowned brands can help you get what you want stress-free.
This can boost your financial health, but using a card also requires diligence. If you are responsible about meeting deadlines and paying on time, you can strengthen your finances.
Knowing how to properly use a credit card online and offline is essential to keeping your credit score high.
How Credit Card Usage and Credit Scores Are Linked
Having a good credit score makes you eligible for more credit and lower interest in the future. A credit card can help or hurt your score. It all depends on how you are using it.
To build a strong credit score, pay your card bills on time.
If you max out your card each month, your score will dip too.
If you use your card carefully, you can build a healthy credit history.
How to Improve Your Score by Using a Credit Card
There are some factors that can impact your credit score when you are using a credit card:
Credit Utilisation ratio
Card bill payment history
Credit Age
Here are some dos and don’ts you can follow when using your credit card.
Dos
Pay Your Bills By the Due Date
When you are using a credit card, make sure to pay your bills on time. Failing to do so can negatively impact your credit score. Always pay your bill on or before the due date to keep your score high. Set reminders and put away funds to avoid missing or delaying payments.
Repay the Full Amount
Your credit card issuer may give you the option to repay a certain amount of your bill on the due date and pay the remaining amount later. If you pay your bill in part, then your bank or issuer will levy interest charges. This can strain your finances, as the APR on such cards is quite high.
Monitor Your Spending
It is crucial to monitor your credit card expenses. Every penny you spend via a credit card is recorded, and you can monitor this on the mobile app associated with it or by checking the statement.
You can get a clear idea of how much you can afford to spend by tracking your past transactions. If you are nearing your credit limit, do not use the card. This will help you keep your finances in order.
Check Your Credit Card Statement Regularly
On analysing your statement with care, you can track if unauthorised transactions have been made using your card. By reporting this on time, you can prevent such purchases from harming your score.
Don’ts
Don’t Apply For Many Cards at Once
While it may appear odd, you don't want to apply for too many credit cards just to see which one you can get. Most credit card companies check credit scores during the application process, which temporarily reduces your score.
Filing too many applications in a short span of time can have an unfavourable impact.
Don’t Spend More Than 30% of Your Limit
Try not to spend more than 30% of your credit limit in a given month. If your credit utilisation ratio is low, then it shows that you can manage your finances without over-relying on credit. If you use your card to its limit, it suggests that you cannot pay for your expenses without credit. This lowers your score.
Don’t Spend if You Cannot Pay Back on Time
If you face difficulty repaying each month, change the way you use your credit card. Once you fix your finances and get back on track, you can use it again. Not paying your total dues results in a late fee as well as added interest on the balance. Both of these can put pressure on your cash flow.
Don’t Overspend to Get More Reward Points
Attractive reward points and vouchers can often lure you to spend more. Instead of spending to earn points, stay within your credit limit and be mindful. Crossing your credit limit will affect your score negatively.
Checking your transactions, statements, and available limit is easy when your card
is linked to a mobile app. That’s one of the major benefits of getting the One Credit Card. Its powerful app helps you review your statement and set budget limits, too. This helps you spend confidently while ensuring that your finances stay healthy.
This lifetime-free credit card has no joining fee, no annual fee, and no hidden charges either. It also gives you great credit card payment offers across electronics, travel, food, and other partners. So, what are you waiting for? Apply online for the One Credit Card today.
