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How frequently you should use your credit card?

A credit card is one of the best options in case of a financial crunch or in the case of certain emergencies where money is required. One of the advantages of using a credit card is that the interest is payable on the amount used. However, undisciplined or frequent swiping of the credit card can land you in a huge debt trap. This is because the interest charged on a Icici credit card is relatively higher than any other loans. The interest rate charged on a credit card ranges between 24% to 36% per annum.

However, if you stop using your credit card, your card issuer may stop sending updates to the credit bureaus. As a rule of thumb, you must use your credit card at least every one to three months to keep your card active and open. But this doesn’t mean you have to go on a spending spree. It’s important to keep your spending within an amount that you can afford to repay to avoid any bad debt. You can pay some regular bills with your card or you can set up a monthly subscription like Netflix to be charged to your credit card to ensure it’s being used often.

Your credit card issuer may not give you an inactivity warning:

Your credit card issuer won’t send you warning about your account being closed or that your account activity isn’t being updated on your credit report. If your account has been closed, you may receive a letter after the account closure. If you want to know if an unused credit card has been canceled, you can call your credit card’s customer service to ask about your credit card status or can try making a purchase with it.

If you have too many credit cards, consider closing some of them. Keep the card open that has a high credit limit ( you need this for your credit utilisation) or great rewards. It is good to use only 30% of the total value of your credit card. This will help improve your credit score. By using 30%, the interest that you need to pay will also be low and hence it will be easy and affordable to pay.

Also, pay off the outstanding amount of your credit card on time to maintain a good credit score. Monthly payments keep you tension free and debt free too.

Tips to avoid common credit card problems:

  1. Pay off your credit card bills on time.
  2. Never skip a payment against your card.
  3. Use your credit cards for needs, not for wants.
  4. Use only 30% of your total credit limit.
  5. Protect yourself from credit card frauds.
  6. Use credit cards which give you attractive rewards and cashbacks.
  7. Use your credit card as a budgeting tool.

 

Additional Reading:- Questions to ask before getting a credit card!

It is always useful to have a credit card as it helps you in times of need. But it is equally important to pay your credit card bills timely. This keeps you debt free and helps you to get a good CIBIL. But don’t use it frequently. Use only that much amount which you can repay without any trouble.

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