June 21, 2024
Responsible Credit

Responsible Credit

The usage of Responsible Credit cards has become a part and parcel of the Indian economy, providing people with easy options and flexibility in managing their finances. This financial credit instrument plays an important role in helping us take control of our expenses, availing amenities like reward points, cash backs and even enjoying premium services like airport lounge services. For example, when using your SBI credit card, you can enjoy access to a lounge at an airport. Nevertheless, the crux of these benefits depends on the conscious utilisation as well as conscientious spending of money.

Responsible credit card usage is a must for those who would like to avoid possible trouble. If you are not keen enough, it can put you in a debt trap, tarnish your credit score and cause financial strain. In the same way, budgeting proves to be an essential mechanism when trying to put money back in order. It is an assistant in helping to restrain extravagant spending, budgeting for the future and realising your monetary aspirations.

Here are top tips for responsible credit card usage and budgeting –

Understand your credit card: Before using your SBI credit card, make sure that you are familiar with the terms and conditions of the card. Awareness of these aspects is also crucial, like the interest rates which will be charged if you do not pay your monthly balance in full every month as well as the annual fees which are part of the card’s cost. Furthermore, ask about the rewards program as well. Several cards give you cash back or points for travel as well as other incentives that come with your consumption.

Activate securely: To how to activate your SBI credit card, follow the instructions provided by the bank, which generally involve calling a secure phone number or activating online. Always use a secure network when activating online, never public Wi-Fi, as it can be vulnerable to hackers.

Pay in full: Settling off the credit card balance by due dates avoids interest charges. This in a way grants you an interest-free credit card. Moreover, it prevents the score from becoming impaired, which can be useful in your future applications for credit or loans.

Timely repayments: Making credit card payments on time is critical to avoiding late penalties and credit score loss. To avoid forgetting, you may set reminders or automate your payments.

Restrict your expenses: Even if your Responsible Credit card has a high credit limit, you should only utilise a fraction of it. Experts recommend maintaining your utilisation below 30 per cent of your total available credit in order to retain a decent credit score.

Emergency usage: Use your credit card for emergencies and large expenditures, not for regular spending. This might help you avoid overpaying and save the card for when you need it.

Monitor your statement: Periodically monitor your credit card statement to keep track of your spending and promptly spot any unauthorised activities. This can also help you understand your spending habits and alter them as needed.

Use Rewards: Many credit cards include incentives that can be useful if used wisely. For example, SBI credit cards may include airport lounge access, cashback, or points. Always redeem your rewards before they reach their expiration date.

Budgeting: Set a monthly budget for Responsible Credit card spending to avoid overspending. This budget should be part of your entire financial strategy and contain all your income and spending.

Save for big purchases: If you want to avoid using a credit card for large purchases, set aside money in advance for them. It can save you from being in debt for a long time and prevent you from having to pay high interest rates.

Check your Responsible Credit score: Credit score is a measure of your creditworthiness. Periodic checks can give you a glimpse of your credit health and provide an opportunity for taking corrective measures if required.

Avoid cash advances:  The rates and fees for taking cash advances, which means withdrawing cash from your credit card, are very high. This expense has an instant effect on the budget, unlike purchases where you generally have a grace period.

Limit the number of cards: Having many Responsible Credit cards can cause people to spend more than they can afford and accumulate debt. So long as you can control them, have as many as you want, but do not go for too many of them.

Be aware of fees: Credit cards can have many kinds of fees, which include annual fees, late fees, and over-limit fees. Pay attention to these and even other fees that may be applied to your card.

Use apps: Today, there is a multitude of budgeting apps that can assist you in keeping tabs on your expenses and budgeting. They can also serve as a beneficial tool to assist you in controlling your spending.

Debt repayment plan: If you have credit card debt, create and stick to a strategy to pay it off. This means you have to reduce the expenditure or boost the income or both. The more quickly you can pay your debt, the less interest you will end up paying.

Negotiate interest rates: If you have been a good Responsible Credit user, then there is a chance that you can try to negotiate a lower interest rate with your credit card issuer. This will help you to save a considerable amount of money if you have an outstanding balance. On the other hand, keep in mind that having a credit card does not guarantee you getting a loan. Your credit score and payment history play a role in this.

Know your billing cycle: Your credit card billing cycle is the time between billings. Knowing this allows you to organise your expenses and payments. It informs you about when your balance will be reported to the credit agencies, which impacts your credit score, and when your payment is due.

Protect your card details: Always keep your credit card information secure to avoid fraudulent activities. This includes not giving your card number over the phone unless you initiated the contact, not responding to emails requesting card information, and routinely upgrading your internet passwords. If you discover any unauthorised charges, immediately notify your card issuer.

Conclusion

In today’s era, prudent Responsible Credit card usage and budgeting are not options, but rather must. It can help you keep your finances in order and prevent sliding into debt. Remember that credit cards are a tool for convenience, not for accumulating debt. Use them carefully and enjoy the advantages. Whether you want to enjoy the pleasure of SBI credit card airport lounge access or achieve your financial objectives, prudent usage and budgeting may make it happen.