Credit
cards are an integral part of our lives these days. No matter whether we have
sufficient cash in our pockets or not, we tend to make purchases with credit
cards. This surely reduces the pain of carrying hard cash each time you opt for
purchase and also spares you from counting on the balance amounts. The other
benefit is that the payment, for the time being, becomes virtual for you which
can be paid for in some later date. But, while using the credit cards for your
benefit and ease, you should also know how to use credit card. The frequency of using a credit card is critical as with
an overuse, you can incur a lot of debt which might be a problem for you to pay
off.
On the contrary, if you do not use a credit card at all, your card will
become inactive depriving you of the opportunity to use it in the future as
well. Hence, there must a balance between the intended use and the actual use
of a credit card. Let us have a look into the aspects that can decide a healthy
practice of using credit cards.
Keep a check on your credit utilization ratio
Credit
utilization ratio refers to the ratio between available credit and the balance
amount. Suppose you have taken a loan of INR 300 out of your available credit
limit of INR 1000. In this case, your credit ratio becomes 30% which is
designated as the risk-free and healthy ratio. Even if you are capable of
paying off more than this; it is recommended that you should not take more
credit to avoid unnecessary debt burdens. Once you know that you can pay and if
you utilize the full limit for your purchases, you will also end up losing your
control over your expenditure
behavior. Hence, make sure that you handle your credit card responsibly and do
not accrue heaps of debt.
Try to pay off in full
There
remains a misconception in the market that a user should leave a certain amount
of credit unpaid every month, but in reality, the partial payments attract more
interest rate on the accumulated debt. Hence, make sure that you are paying the
liabilities on time and every month the entire amount of your bill is getting
paid off. If you do not pay off the entire sum, it will get added to the volume
of future purchases as well making the total sum of debt unbearable for you at
the end of the year. Stay away from partial payments and ensure paying less
interest.
Your credit card must be active
Responsible
use never means no use at all. Generally, if you do not use your credit card
for one complete year, the issuer tends to close the card, and your credit card
turns inactive. Hence, make sure that you are using your credit card at least
once or twice a month to make the necessary purchases so that it never turns
into an inactive one. Once you receive the bill and pay the same, your credit
account gets marked with a “Paid” sign which acts in favor of you making your
balance 0%. But, if you do not use your credit card for long, your account will
show “no activity” which could be alarming.
The appropriate frequency of using credit cards
There is
no such rule to the frequency of using a credit card. However, the same depends
on the purchasing behavior of an individual and the ability to pay the volumes
of debt in time. It is suggested that every credit card that you have should be
used at least once a month to keep it active but if you have too many cards, to
keep all of them active, do not start purchasing randomly. Never let your debts
get you into trouble and make sure that you use the credit cards for your
benefit.
