A credit card is a great tool to add to your wallet but not to mention it comes with a fair share of pros and cons. It becomes very important to use a credit card wisely in order to enjoy its benefits. A credit card helps you in building a credit score and your credibility provided you are using it responsibly. Credit cards can be your sweetest friend or the biggest nightmare as they can lead you to a possible debt trap. Without any further ado, here are the tips on how you can use your credit card wisely in order to maximize their benefits and also build a good credit score.

    1. Choose the right card: This is where all your decision lies, choosing the right credit card is very crucial as it will going to help you in the long run. Having the right credit card helps you in maximizing its benefits. Start with identifying your needs and spending habits and then compare the credit cards that match them. Choose the one which is of the highest value to you.
    2. Pay more than the minimum: In case you have no funds to pay your credit card dues on or before the date at least try and pay more than the minimum due amount. This will help you avoid the late payment charges and this will also not protect you from harming your credit score.
    3. Earn rewards: Read the rewards program of your credit card as it differs from credit card to credit card. Once you know it you can use your credit card for those transactions only that allows you to earn reward points. This will help in maximizing the benefits of your credit card. Use your card more often so that you can build your credit score more easily.
    4. Avoid withdrawing money from ATMs: You must know that using a credit card at ATMs for cash withdrawal attracts charges. This will only increase your expenses and affect your credit score. So, avoid using your credit card at ATMs.
    5. Pay the dues on time: To have a good credit score you need to strictly adhere to the repayment cycles. On paying the credit card dues your credit score increases and so do your credibility.
    6. Low credit utilization ratio: Maintaining a low credit utilization ratio between 30% – 40% is ideal for building a good credit score. Set a threshold limit on your credit card so that on reaching that limit you do not use your credit card further and can maintain a limit. This will help you in building a good credit score.
    7. Immediately report missing or lost card: Whenever your card is lost or stolen immediately report the same. This will save you from the fraudulent activities happening on your account as it will directly impact your credit score.


Bottom Line:

To conclude, you can definitely build or improve your credit score by implementing the above tips while using your credit card. Using a credit card wisely can help you enjoy all the benefits it has to offer.

Additional Reading – Hidden credit card charges you must be aware of

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