Knowing how to use your credit card wisely is paramount for first-time cardholders and experienced users. This card can be a convenient resource but requires responsible and smart usage. It can help you navigate a crisis or add to your debt. It all depends on how you use it.
Emergencies Where A Credit Card Can Help
Credit cards prove to be a vital resource during stressful situations. Some of the emergencies include:
- Medical Emergencies
These are out-of-the-blue situations and require instant attention and funds. Hospital bills, or an urgent surgery needs to be addressed immediately. A credit card can help you cover these costs without any financial strain.
- Emergencies During Travel
An urgent work trip or a family member requiring your help in another city or country can strain your finances. A credit card can help you book your travel and stay easily and even get you discounts.
- Family Emergencies
Urgent childcare, relocation or supporting a family member who needs immediate funds can lead to unplanned expenses. A credit card can help tackle these situations hassle-free.
- Legal Emergencies
Engaging a lawyer to help you deal with legal hassles or court cases can be heavy on the pocket. This is where you can rely on a card to help you pay the related fees.
- Essential Services
You can use your credit card to quickly settle the balance and restore services in case you have missed utility bills. Some cards may even offer cashback on such payments, which makes it more beneficial.
- Car Repairs
Unexpected car troubles require immediate repairs in case of a breakdown or an accident. To avoid hurdles in your everyday routine, using a credit card may be wise.
- Home Repairs
Be it leaky roofs, damage of pipes in the washroom or CCTV security, your home may require constant care and servicing. Use your card for unexpected expenses that compromise your safety or comfort.
How To Use Your Credit Card Wisely
Here are a few tips that can help you when you swipe your card in an emergency.
- Assess What’s Needed
Before swiping, analyse whether it’s an emergency expense or not. This helps you decide whether to borrow from the issuer or wait until funds are available. This is important as identifying necessary and non-essential expenses helps avoid incurring unnecessary debt.
- Gain Knowledge of Financial terms
To use it smartly, it’s crucial that you familiarise yourself with financial terms such as APRs, interest rates, and fees. Understanding these can help you make informed decisions about how much you can afford to borrow during an emergency.
- Plan Your Repayment Strategy
Before adding expenses to your card, make sure you have a repayment plan. Aim to pay off the debt as quickly as possible to reduce interest charges and avoid long-term financial strain. You can use the snowball or the debt avalanche method based on your financial standing.
- Use Your Reward Points Wisely
Credit cards usually have rewards in the form of cashback or points. You can be smart in emergencies and redeem these rewards for essential expenses.
- Avoid Cash Advances
If possible, avoid withdrawing cash from an ATM using your credit cards. They have higher fees and interest rates than normal purchases, so using them as the last resort is better.
- Always Monitor Your Spending
Another important thing to keep in mind is the credit limit. Keep a close eye on your spending, as exceeding your limit impacts your credit score negatively. This way, you will also avoid unnecessary charges.
Follow Caution When Using Credit Cards During Emergencies
During a financial emergency, remaining calm and considering your options is critical. Seeking help from family and friends can also be considered in dire situations. Here are some additional tips to avoid debt accumulation during a financial crisis:
- Be minimalistic and stick to your budget; don’t indulge in random expenditure
- Avoid maxing out your credit card
- Ensure you keep paying the minimum amount due, else it will lead to debt accumulation
- Be wary of unfamiliar lenders to help you avoid scams
Also, consider using a credit card to card apply strategy by transferring your balance to a lower-interest card. This gives you more time to pay off one card, which you may have used in an emergency.
If you are looking to get a credit card to manage daily and urgent expenses, you can get access to the smoothest on-boarding process with the One Credit Card. This card is an all-rounder and provides rewards and benefits while also being useful during emergencies. With a powerful app backing it up, this card can be used strategically to pay off bills or convert spending into affordable EMIs.
The card also provides 5X rewards on the top two spending categories and a range of discounts via partner brands. Apply now to avail benefits at your fingertips.
Rawat