Credit Builder Loans – What Are They and Do They Really Work

Introduction

When you apply for a home or vehicle loan, lenders look at your credit history to determine whether or not to sanction your loan request. Your credit score will also influence the interest rates you are asked to pay. But what if you have no credit history or only a thin history? Does that mean your loan request won’t get approved? Depending on your income, it could get approved, but it’s better to have a good credit history to request loans in most cases. With that being said, there are ways to improve or build your credit history with the help of “credit builder loans.”

Let’s understand what a credit builder loan is and how it works?

What Is a Credit Builder Loan?

When your financial struggles could really use a personal loan, you go to a lender, fill out a personal loan form, and wait for it to get approved. With a credit builder loan, the idea is to build your credit first and then get the money.

With a credit builder loan, you get approval to borrow a certain amount of money from the lender. That money is then deposited in an interest-bearing savings account. You would be required to repay the amount with interest over some time. Once you have paid the entire amount with interest, the lender lets you access the funds in the savings account and any interest you might have earned. The lender then reports your credit history to the big credit bureaus. This helps you build your credit score.

How can I apply for a credit builder loan?

There are many credit unions and community banks that offer credit builder loans. You can also look for online lenders or finance companies that offer better interest rates. You don’t need to have a good credit record or a long one to get approved for a credit builder loan.

These loans are meant to help you rebuild or build your credit history & score. The lenders would charge you a small fee to open the loan account in most cases. Otherwise, you don’t need to get your credit history checked. 

How does a credit builder loan improve your credit history?

For a credit builder loan to work, you must make timely repayments. Additionally, the lender must report all the payments you make to the credit bureaus. Hence, you must choose a trustworthy lender or a finance company with a good track record of reporting such loan payments to all the bureaus. 

Another thing to remember is that the lender isn’t obligated to report to all three major credit bureaus. So, it falls on you to ask them to report to the three major bureaus: TransUnion, Experian, & Equifax. This part is crucial because every credit bureau assigns a score based on their record information.

How much do credit builder loans cost?

To open a loan account for credit builder loans, you will have to pay an upfront fee. After that, the interest rates the lenders offer depend on various factors, like who the lender is, the amount you are requesting, and the duration you can repay the amount. 

Before applying for a credit builder loan, you have to be aware that the lenders can charge you a penalty if you pay off the loan before the date you had previously agreed to in the contract. This is to recover the interests they would lose out on if you pay off the loan ahead of its schedule. 

Conclusion

Credit builder loans can be an inexpensive and easy way to build or rebuild your credit score if you make the repayments on time and ensure the lender reports the payments to all the major credit bureaus. With a bit of care towards your borrowing needs and income, you should be able to repay the loan with no issues. 

What Is Good Credit For Buying A Home?

You don’t need a perfect credit score to get a mortgage. In some cases, the score can be in the range of 500. However, potential lenders will reward higher scores with more options and lower interest rates because of the risk that debtors will not repay the loan. For most loan types, the home purchase loan required is 620 or higher, but the higher the better, so borrowers above 740 have the lowest interest rates.

You can get a traditional loan with a 620 credit score, but mortgages often require a higher rating. According to Ellie Mae, in the six months to June 2020, FICO ( credit score by Fair Isaac Corporation) earned an average of 756 points for homebuyers on traditional loans. High-scoring borrowers will also receive a personal mortgage insurance (PMI) reduction required when paying the down payment. With a 10% down payment, 620 point borrowers will pay 1.1% of PMI, according to Joe Parsons, a branch manager and senior loan officer in Dublin, California. He says 760 FICO borrowers pay only 0.30%.

If you have a 500 credit score or higher, your chances of getting a federal mortgage guaranteed are perfect. FHA (Federal Housing Administration) loans only allow a 3.5% down payment, but you must have a FICO score of 580 or higher to qualify. If your credit rating is between 500 and 579, you will have to pay 10%. However, the lender can set a minimum loan amount for the FHA loan. According to Ellie Mae, the average FICO score for homebuyers on FHA loans was 680 in the six months to June 2020. Even lenders who are willing to take on borrowers with less than 600 creditors want to make sure that other aspects of the loan’s financial position are safe.

Most lenders want to see a credit score of over 700 or 720 in order to get a mortgage (commonly known as a jumbo loan) that exceeds the statutory credit limit. Look for potential homebuyers with a solid financial position, including good credit. Making a lot of money is inherently dangerous. If your FICO score is 740 or higher, your jumbo mortgage rate may be the highest. You can use a mortgage calculator to show that even lower interest rates can make a big difference.

How Can I Get a Better Score?

If your score doesn’t match a good interest rate or the type of mortgage you want, it makes sense to defer the purchase of the home and take the time to create a credit profile. This can be done in a variety of ways. You have to pay all invoices on time as payment history is the biggest factor affecting creditworthiness.

Make sure you keep your credit card balance low. Many experts recommend using less than 30% of your credit card limit. This is much better when it is much lower. The available loan amount is known as loan use and is the second largest factor in the score.

Keep a check on the credit report. Check for point reduction errors. Keep your credit card open as closing the card will reduce your available balance, increase your credit usage, and may lower your score.

Make sure you withdraw from time to time and immediately. This prevents the issuer from closing the account due to inactivity. Look at the credit mix. If you only have 4,444 credit cards or installment loans, consider adding other types to secure a balance of payments across different credit lines. Whenever you’re trying to create a thin credit file, consider adding a new credit card, secure credit card, or lender loan. Remember that it takes more than 6 months from opening a new account to applying for a mortgage. Therefore, plan your application carefully.

Keep Track of Your Progress

Check your progress with a free score as you strive towards the money you need to buy a home. Some credit cards and many personal finance websites offer them. Both types of scores can be used to track progress. Both emphasize the same elements, but because they are lightweight, they tend to move in parallel. Mortgage lenders have identified older versions of the FICO score. 

If you want to know exactly where you are and what your mortgage lender is looking for, you need a comprehensive report from FICO. You can do this on myFICO.com and then cancel the monthly service instead of paying an ongoing fee. Be sure to cancel before the next billing cycle begins. Monthly subscription fees are not prorated. However, if you are near a free score source or in a good credit area, you do not have to pay to check your FICO score. You almost certainly have enough credit to win the highest award.

Final Thoughts

Your creditworthiness is not the only factor influencing your mortgage approval. But it is an important indicator of your financial health. Track your credit, pay on time, and get help in choosing the right mortgage. By making targeted efforts to improve your creditworthiness, you will increase your chances of getting a mortgage. Higher credit ratings can also pave the way for lower interest rates and more favorable terms. You can do your own research by asking the people around you and searching the internet for specific questions. All you need is an internet connection like 1st Broadband.

Avail Best Personal Loans with the Lowest Interest Rates

Are you looking to apply for a personal loan at a lower rate? You are not the only one looking to do that. 

Many people don’t apply for an instant loan because it involves a higher rate of interest. It is because it is an unsecured loan. 

But with a robust CIBIL score, it is possible to enjoy the best personal loan interest rates

Read on and know the best way to get personal loans at a lower rate! 

  • Use your credit score 

If your CIBIL score is higher, you don’t have to worry about a higher loan rate. It is because you can make the most of the credit score. If it is 750 or more, you can get the loan approval at a lower rate. It is because it denotes that you can manage timely repayments as you have done in the past. You can maintain a higher CIBIL score by paying off your loan and other outstanding on time.

  • Don’t hop jobs 

Many Salaried individuals keep changing their jobs often. It is to enjoy a hike in their payment structures. Lenders don’t trust such candidates creditworthy as they may not make timely repayments if approved. Hence, if you want to avail of the best personal loan interest rates, then you ought to have a stable employment record. Therefore, if you wish to enjoy the best personal loan interest rates, you should not switch jobs. In turn, your stable employment record may help you negotiate for a lower interest rate.

  • Use your past relationship with your lender 

If you have a past relationship with your lender, then you can use it to your advantage. Since lenders are aware of your past repayments and other records, they may approve your request at a lower rate of interest. In turn, it may help you pay lower EMIs and save big.

  • Compare all available loan offers 

Another way to enjoy the best personal loan interest rates is to compare all available loan offers. It is possible to do that on a third-party website. This way, you can compare all available deals on a third-party website and pick one matching your needs and budget. Even if you are able to save a bit on interest charges, it may help you ease off managing your outlays better.

  • Use your employer’s credibility 

If you work for a known company, it may work in your favour to avail of the best personal loan interest rates. Yes, you can use your employer’s credibility to negotiate for a lower rate of interest. Why? It is because when you are employed with a reputed company, lenders are sure that you will receive your pay cheques on time.

You are now aware of the ways you can avail of the best personal loan interest rates. This way, it may be possible to settle for a lower rate and save big on repayments. 

Applying for a top up personal loan with a known lender may help you get approval for a significant amount. It may also let you enjoy instant approvals with faster disbursements. You may also make repayments over a flexible repayment tenor of up to 5 years. 

Bajaj Finserv presents you with pre-approved offers on personal loans, home loans, business loans and more. It is to simplify the processing of the loan. 

You can explore your pre-approved loan offers today by sharing your basic details such as your name and mobile number.    

Implications of Taking a Personal Loan and Business Loan Together

Loans give us instant cash to pay for expenses when we need them. There are several types of loans you can take, and two of the most common are personal loans and business loans.

This post discusses the possibility of taking both these loans simultaneously. Today, you can procure an online personal loan or a business loan a lot more easily than you did in the past. Let’s first compare the two types of loans.

Difference Between a Personal Loan and Business Loan

An online personal loan is an unsecured loan that you procure for personal reasons like medical expenses, home renovation, or a child’s education. A business loan is meant to cover business expenses. Business loan amounts are typically higher than personal loan amounts, and you need more documentation to get a business loan.

Can I Take a Personal and a Business Loan Simultaneously?

Absolutely, yes! The key here is to meet the requirements. If you don’t pose a high risk to the lender, they will be ready to sanction a second loan to you. Here are a few conditions for getting a second loan:

Low Debt-to-Income Ratio

Your debt-to-income ratio, as the name suggests, connects your income to your debt. If you have a high income compared to your total debt, it will increase your chances of a second loan. A debt-to-income ratio below 40% is usually acceptable.

Good Repayment Capacity

Of course, your lender is primarily interested in getting their loan amount returned. As a result, they will pay close attention to your financial credentials. Your bank statements, income tax statements, proof of income, and audited profit and loss statements will all come under scrutiny.

Upon examining your documents, if the lender concludes that you have a good repayment capacity, they are likely to give you a second loan readily.

High Credit Score

Your credit score is a three-digit number generated by India’s premium credit reporting agency, TransUnion CIBIL. It reflects whether you have good or bad credit behavior.

If you are financially responsible and do not default on payments, you will have a high credit score. A credit score of 750 or above is considered good and will be looked upon favorably by lenders, increasing your chances for a second loan.

The reputation Of Your Employer

Lenders will probably like you if you work for a well-known, big multinational company rather than a small, unknown, private firm. This is because you will be perceived as having a stable income with job security and can easily repay the loans.

Income

If you have a high income, you have two advantages. Firstly, you can take high loan amounts, and secondly, you can get the lowest interest compared to the current personal loan interest rates.

The lenders will look favorably on you if you have a high income because you will be more likely to have the money to repay two loans simultaneously. 

Relationship With Your Lender

If you are an existing customer of the lender, especially with a savings account (or if you have some investments with them), they will send you to an unknown person. Therefore, youYou will get more leverage for a second online personal loan or business loan from a lender.

Your Repayment History

How has your repayment pattern been with previous loans, if any? A lender will delve into your previous financial dealings with a specific focus on whether or not you paid off your loans promptly. If you did that, you are likely to pay them in a similar fashion, which makes you a preferred candidate for a second loan.

Conclusion

You can get a personal loan and a business loan at the same time. However, take care that you meet the conditions that we have outlined here. And, above all, pay attention to the current personal loan interest rates, which tend to be quite high compared to interest rates of other types of loans.

You can take advice and assistance from Fullerton India, a Non-Banking Financial Company (NBFC) from whom you can get loans with competitive pricing, minimal documentation, and digital processing.

Do You Know the Types of Loan Against Property in India_

People invest in a property to either save their money or earn money by selling it at a premium. And there are many ways where assets are assisted in times of need. One such method is when an asset becomes perfect collateral for a loan.

One can also apply for Loan Against Property to get money by mortgaging their property. Due to the collateral, there are a lot of interest savings that come with such a loan. 

Housing Finance Companies have brought amazing types of Loan Against Property that one can avail in India. 

Compare the different types to make an informed decision. Scroll down to know different kinds of LAP offered by various companies offering home loans.

Registered Property along with Maps

Banks consider this kind of property the best mortgage because such properties are clearly sanctioned with proper maps by town planning authorities. Thus, these properties are clear and legal, without any risk of disputes.

Registered Properties without Maps

These are also registered and legal properties but do not contain any maps. Due to this, banks and NBFCs considered other mitigating factors such as sale deeds and ATS with town planning. However, these properties are at internal risk, so the applying should be done with the guarantor or co-applicant.

GPA or General Power of Attorney

GPA provides the right to stand on behalf of other people and manage their assets for the applicant. However, banks and BBFC are not supposed to grant the Loan with GPA. For this, the applicants need to have legal authorities of their property or external financiers with high-interest rates or opt for other Housing Finance companies.

Lal Dora Land

Property of Delhi landscape with 360 villages falls under Lal Dora land for residence and livestock rearing. The loan against property is not provided to these properties by Banks and NBFCs.

Agricultural Land

Agriculture lands are used for only agricultural purposes; one cannot use this property for other purposes; hence it is difficult to convert them into non-agriculture lands. Furthermore, due to many restrictions, the Bank does not provide Loans against property without income proof to agricultural lands.

Besides this, different prices of loan against property interest rates can be availed based on the nature of the owner’s relationship with their property, and the interest rate can be charged according to this. Below are the interest rates that are generally charged:

Loan Against Self-Occupied Residential Property

In the case of self-occupied residential property, the banks and NBFCs can avail up to 65% of the fair market value of the available property.

Loan Against Vacant Residential Property

The bankers may perform some inquiry process in case of unoccupied property or if there is any infringement on it. For such property, the Loan of 50% of the present fair market value is granted by Banks.

Loan Against Rented Residential Property

If someone is applying for a loan on their rented property, the Banks and NBFCs will inquire about the property’s total amount of rent in a financial year. Then, a loan of 50% of the fair market value of the property is given.

Loan Against Self Occupied Commercial Property

In this case, before approving the loan application, the banks and NBFCs will inquire about the business and its activity in a financial year. Then, up to 60% loan is availed of the present market value of the property.

Loan Against Rented Commercial Property

Before verifying the Loan against rented commercial property, the Bank and NBFCs may inquire about the total amount of rent availed from the commercial property. After the inquiry, 60 % of the present market value for that property can be availed.

Loan Against Residential Plot

Some people avail Loan on the mortgage of the residential plot. The amount of loan is decided on the location of the plot, and up to 40%, fair market value can be availed of property.

Loan Against Mixed-Use Property

Some people apply for a loan against the property on the mortgage of various properties like commercial, residential, rented, or residential plots; it is known as a Loan against Mixed-Use property. The amount of the loan is based on the use of the property. Up to 55% of the fair market value is availed.

Once the verification and sanction of the Loan are done, the burrowers can ask for the details of floating interest rates and fixed interest rates to manage the amount of repayment.

Summary

These different types of loans against property can help beneficiaries get liquid money against their property at the time of financial needs. The amount of loan is decided on the present market value of the property by banks and NBFCs. Therefore, one can easily apply for loans from those banks or NBFCs with the best offers for LAP. All you need is to fulfill the loan against property eligibility criteria and other required documents to get the benefits of LAP.

How to Financially Recoup after Divorce

In the last decade, the number of divorce cases has sharply risen that nobody gives a toss to it. Nobody cares about if they are parting their ways from their significant others; everything seems normal to them, but it can be a life-changing event, and you realize this fact when you see a dark cloud looming over your financial life.

The divorce is done, so you must have settled all of your finances with your partner. Now you and your partner will be moving in your own separate ways. Whether you are alone or your children are with you, you will have to take up the responsibility of managing your finances more smartly.

Given the fact that you have children and your ex-spouse pays you money as maintenance for your kids, it does not mean that you do not have to revamp your financial condition.

The good thing is that you have settled all your joint accounts, so your only focus is on yourself.

Ways to take control over your finances post-divorce

Even if you had been living a very good life with your partner until divorce, it must knock down a great blow on your finances.

You may find your financial condition completely wobbly – of course, you will feel it because one of the pillars is out of your life now. Here is what you can exactly do if you are facing financial anxiety.

  • Revamp your budget

The budget that had been helping you greatly until your divorce will not help you at all. You will have to look into your budget and revise it as soon as possible. This is because, at the time, two people had been contributing to the budget, but now you are only there.

It is crucial to make a budget that fits your financial goals.  Old spending habits cannot help you stay afloat. It can be more challenging if you have a child and cannot rely on maintenance support.

You will have to analyze how much money you are making every month and then accordingly you plan for your expenses. Given the fact that you have debt and you are to save money, it can be challenging for you to keep your head above water.

If so, you will have to make big changes. If you keep spending money as you had been before your divorce, you will eventually fall into a serious financial problem, and unfortunately, it will have a ripple effect.

  • Come up with an effective debt settlement plan

Post-divorce, you will have to be careful about your debt. Of course, nobody will share your debt with you. When you are revising your financial budget, you will have to come up with a solid debt management plan.

The earlier you settle your debt, the quicker you will gain control over your spending. Debt puts a lot of burden on your income undoubtedly. Hence, you should settle it down as quickly as possible. A real problem arises when you have multiple debts. Likely, your income does not allow you to pay them.

If you make a default, you will end up rolling over the loan over and over and, as a result, fall into debt. This is not a great idea, especially when you are to pay off the debt in a lump sum.

There are various types of loans, including loans for bad credit in Ireland that require a lump sum payment.

  • You should consolidate all of these debts so that you can pay down the debt in manageable fixed instalments.
  • If you have got a windfall or you think that you can pay off the whole of your debt because you do not want to take on the burden over a couple of next months, you should not mind paying it off before the due date provided it benefits you despite early repayment fees.
  • Build your credit

This piece of advice is generally for those who had no credit card or loans in their own names before the divorce. You may need to borrow money down the road. What if you come up with a financial emergency and do not have enough money in your savings account?

You will have to borrow money, and a lender will check your credit file to analyze the risk associated with lending you money. If you do not have a credit score, the lender will hesitate to lend you money.

This is because it involves very high risk. If the lender approves your application, high interest rates may pose a threat to your finances. Personal loans can be a great way to build your credit from scratch.

Although they can be expensive because of high-interest rates, you do not fear losing anything valuable and will pay off the debt in fixed small installments. When you settle your debt over an extended period, it proves that you can stick loyal to your financial obligations despite ups and downs.

  • Look out for your coverage plans

Have your ex-partner removed from your health insurance as soon as possible. Take a look at all plans that can cover you as well as your kids. You can likely get a better coverage plan this time.

However, at the same time, you will have to think about your insurance premium. Make sure that it does not put a burden on your finances. You are buying health insurance for benefits in the future, not for taking a toll on your finances.

The final word

Financial management is not easy at all, and it becomes tougher when you have separated from your spouse. If you are struggling to recover financially, you need to revise your budget first.

Try to make a debt settlement plan because early settlement can help you avoid burdening your finances in the future.

Improve your credit because you can still need to borrow money down the line. All these tips are crucial to keep a tight rein on your finances.

How To Pick The Right Personal Loan Company?

There is an inclination towards taking help in finances. Of course, you cannot always stay on the rosy side when it comes to money matters. There can be instances when you might need some financial help. In these instances , loans come as a soldier for you. Continue reading “How To Pick The Right Personal Loan Company?”

Describe the idea of crowdfunding?

In case you’re an entrepreneur, it’s probable that you’ve heard of crowdfunding. But, you possibly additionally have a few questions about it, like “what is crowdfunding?” and “how does crowdfunding paintings work?”

The conventional crowdfunding definition is sourcing coins – typically via online approach – from a group of human beings. By achieving a big sort of individuals, the ones doing the crowdfunding regularly improve large quantities of coins without eliminating loans, emptying out their economic financial savings or tying themselves to task capitalists or banks.

In recent times’s crowdfunding efforts finance everything from unbiased movies to analyze and even lifestyles-saving scientific treatments. Contemporary crowdfunders leverage the strength of social media and digital presence to encourage and encourage people to invest.

HOW DOES CROWDFUNDING paintings?

In advance, rather than going into the advantages of crowdfunding as opposed to different avenues to fund your business corporation, we ought to absolutely solve the query of ways crowdfunding works. To qualify as crowdfunding, a platform which incorporates Kickstarter or Indiegogo has to place your task or cause in front of a huge quantity of people. Successful crowdfunding shape also makes it clean for clients to invest and provide some types of praise or move again on funding as an incentive. Many crowdfunding opportunities can expose your idea or business to tens of thousands and thousands of capability buyers. That’s an entire lot of wallets that could probably assist you gain your investment dreams.

Benefits OF CROWDFUNDING

Elevating quite some coins inside a short quantity of time – and without pretty face-to-face tries on your detail – is a big advantage. Right right here are greater:

1. DIVERSIFICATION

Similar to the common feel in the back of diversifying your investment portfolio, crowdfunding investment commonly unfolds throughout many people, each of them donating a small sum. That is attractive to each event involved in a crowdfunding for enterprise try; it negates the hazard of relying mostly on one or  belongings (like assignment capitalism) and spreads the financial hard work for the duration of a much wider area. If one investor falls through, it barely makes a dent to your funding efforts. 

This makes crowdfunding attractive to solo marketers, artists and different progressive types who’re looking to fundraise for a brand new assignment. They will have been burned through companions, donations or investors before and have a tough time trusting folks that should damage their task. Crowdfunding campaigns are easy to install, frequently require little to no renovation other than posting updates or nice rewards and offer a tangible manner for people to contribute funds in a relaxed and comfy way. 

2. Opportunity to connect

Whilst you take a look at how crowdfunding works and why it has become popular, you have to think about that both the funder and the organisation or motive being funded benefit. Crowdfunding lets you attach deeply with the ability of customers in an area you’re in. In case you’re a writer, you reach potential readers; filmmakers tap straight away into destiny moviegoers. 

3. Polishing YOUR PRESENTATION

Whether or not or no longer you’re crowdfunding to your personal modern interests or launching a brand new service or product, you want a pitch or presentation to succinctly describe your task to others. Whilst you use crowdfunding, you could polish your presentation via having a take a look at what you provide from the top diploma. Due to the fact you want to address records, marketplace, your offerings, price propositions and extra before you launch a crowdfunding advertising campaign, you’ve got the whole lot organized for future displays.

The amount of cash raised is a metric for the manner a contemporary style of artwork may be received, or a barometer for a band that isn’t always sure if their fans will respect a super experience of musicality with a new album. 

4. Improving YOUR marketing EFFORTS

Even as you fully take advantage of crowdfunding , you leverage media and marketing and advertising and marketing to your choice. Due to the fact crowdfunding campaigns are digital, any challenge can optimize photos, films and different visible aids to draw a big quantity of donors. Other media will probably cover your fundraising efforts and you may piggyback on this to percentage news of your project on social media, through electronic mail newsletters, in conventional marketing campaigns and through other digital avenues. 

5. VALIDATING YOUR offerings

One of the massive dangers of launching a state-of-the-art project is gambling on whether or not or not your target market turns into unswerving customers. A bonus to crowdfunding is that you get to offer your idea to huge numbers of people and get their remarks early in the game. As you tweak your marketing and advertising efforts and presentation abilties, you moreover mght address holes for your idea earlier than it’s too late and simply create a service or products that solves your customers’ issues. 

6. FUNDRAISING performance

Performance is what makes crowdfunding art work. While you streamline and pay attention to your fundraising efforts, you dispose of quite a few of the legwork that goes with coming close to top notch assets of sales. This now not simplest saves you time, however it additionally saves you cash and helps you to improve consciousness on growing your message and developing a strong emblem.

Smart Tips to Maximize Credit Card Benefits

Introduction

Have you ever asked yourself if you’re making the most out of your credit card? Are there more benefits to these than what you are getting? To reveal the truth, there is more to credit cards than meets the eye! All you have to do is learn more about credit cards as you continue to use them.

A credit card is a modern-day financial tool that can benefit users as well as lenders. However, the smart way to make the most out of a credit card is to use it responsibly. If you are smart with its usage, you can maximize your savings and gain multiple benefits at the same time.

Here are some credit card tips and tricks that can help you maximize the gains out of them:

 

  • Choose a credit card as per your lifestyle:

 

Different credit cards cater to different lifestyles. These offer various benefits and reward programs accordingly. Various credit cards are designed specifically for travelers, shoppers, first-time users, high net-worth individuals, etc.

To maximize benefits from your credit card, always aim to align it with your lifestyle. For instance, if you mostly use your credit card for spending on groceries and household shopping, go for a credit card that offers discounts on the same. If you are into travelling, find a card that offers cheaper flights tickets and discounted hotel bookings. Those who enjoy premium benefits should look for a credit card that gives high-end benefits like free golf lessons, luxury resort stays, etc.

It doesn’t make sense to have a card that offers benefits that are never going to be used. You may opt for a travel card, but if you use a flight only once a year, you will not gain out of your credit card as much as you would expect.

 

  • Opt for multiple credit cards:

 

Since every credit card has its own set of benefits, owning multiple credit cards can help in maximizing the benefits. The benefits of various cards put together can add up to several savings. For instance, you can go for a credit card that offers rewards on groceries and another that has travel benefits for buying airline tickets. This will help you to tap into various reward programs and maximize benefits. 

 

  • Choose cards with different billing cycles:

 

Ensure to have a gap of at least 12 to 15 days between the billing cycles of different credit cards that you own. With 2 cards that have different billing cycles, you will be able to use one credit card for the first 15 days of the month and the second one in the latter half of the month. It will also allow you to use the grace period of both the credit cards and have more time between your credit card usage date and the bill payment date. 

 

  • Look at your card as a budgeting tool:

 

Try to make all your spending using your credit card. This will help you to know exactly your monthly spending and the various categories of expenditure you have every month. Simultaneously you’ll also continue to earn rewards for all your expenses.

You should only do this if you have the capacity to pay off the entire bill on time and each time. Never spend more than what you can afford else you may land up in a debt trap without realizing it.

 

  • Monitor your card statement and track credit score:

 

If you frequently use your credit card, the best way to make the most of it is to regularly check your card statement. This will help you to know all your expenses and highlight any false charges that may have been applied. It will give you a true picture of how much you have spent and whether you can afford it.

Regularly check your free credit report online to know your credit score and credit behavior so far. The credit score listed in your credit report is calculated by a credit bureau. Frequently checking your credit report can help you to check the accuracy of the report. In case you have missed any EMIs or credit card bill payments, your credit report will reflect the same.

Credit card usage tips for first-time users

Here are some tips on credit card usage for first time users:

  • Always spend within your budget and avoid overspending with your credit card because of the easy availability of funds
  • Watch out for mobile alerts and keep a tab of your spending through the card. This will help you to stay within a budget and alert you in case you are approaching the credit limit
  • Always pay the credit card bill on time every month. If you only pay the minimum amount due, it can result in high-interest rates being charged on the remaining balance.
  • In case you are unable to pay the entire credit card dues, ensure to pay as much as you can. Try to convert the remaining balance into EMIs as soon as you can. This will save you from additional charges and allow a lower interest rate.

Endnote

While making the most of your credit cards, try to avoid depending entirely on them. With credit cards, it is easy to get into a debt trap and difficult to get out of it sooner. Hence, the best credit card tip for maximizing benefits is to check your spending, be disciplined and be aware of all the features of your card.

Meta Descriptions

Get the most value out of your credit card. Learn these credit card dos and don’ts to gain maximum benefits while ensuring a good credit score.