Shoppers love credit cards, as it offers them the financial freedom to purchase whatever they desire, and whenever they like, without having to fret about paying for them immediately. A credit card enables users to build a continuing balance of debt that is subject to a certain interest that the concerned bank charges. Credit card users can purchase things and pay for them later. Every credit card comes with a specific limit that is set by the issuer on the basis of the customer's eligibility criteria and credit score. When it comes to wise usage of a credit card, knowing just the basics of a credit card is not enough. You must also learn to use it well. Here are some smart shopping tips that can help you use your credit card effectively. Pay your credit card bills on time. This may sound very simple, yet many cardholders ignore it. A high-interest rate is charged by credit cards on outstanding balances. If you fail to pay your balance on time, the interest piles up, and if you happen to miss or default payment, you need to bear a penalty, and it also hampers the credit score. Always track your spending. Statements of credit card record all your transactions and the subsequent interest or fees you are charged on it. By keeping track of your spending, you can record your expenses and make on-time payments to avoid piling up debt. Keep your credit utilization ratio low. Try to maintain a credit card balance of less than 50 per cent of the credit limit. Your credit score is adversely impacted by carrying high balances on credit cards. When high balances are carried over to the following month, the interest outgo tends to increase. Use your credit card for purchasing big-ticket items only Most people get into the habit of making small purchases using credit cards. If these small purchases are left unchecked, they can pile up over time. To avoid the accumulation of thousands of purchases, consider making use of your credit card for big purchases only. Scrutinize the promotional offers carefully. Customers are often lured with various promotional offers by credit card companies. While many of these offers seem lucrative, it is essential to thoroughly understand the terms and conditions of the offers to avoid falling into the trap of purchasing something that you do not require just because it came with an offer. The rewards, perks, and benefits of using a credit card are impressive, but if only you have the self-discipline and willpower to use it wisely.
