Managing finance after meeting the requirements of everyday life is not easy. Moreover, doing the same during a crisis becomes tougher. During a crisis, when the salary and working hours have started showing the repercussions of the global economy, individuals need to take their financial decisions wisely.
However, the strategic use of credit cards can help borrowers to survive their finance during this time. This financial tool comes with a few limitations, costs, and risks. However, it can be a powerful and helpful device that can assist borrowers in their financial need during a crisis.
Here are some tips on using it during crisis –
- Take advantage of the grace period
Every credit card comes with an interest-free timeline that consists of the billing period along with 20 to 25 additional days after completion of the same. Depending on the financial company, this timeline can range between 40-50 days.
To use this grace period at its fullest during crisis time, firstly, borrowers need to know when their billing cycle ends and which day is the due date. Usually, both dates are fixed every month. Then, borrowers need to make their largest monthly purchase like groceries, bill payments, etc. on credit cards on the next day after the billing cycle commences.
Thus, financiers can bill these expenses in the next payment cycle that provides cardholders substantial time to organise their present finances.
- Preserving the available cash and use reward points
In the time of a crisis, the source of income of every individual can also be at risk as the economy has slowed down. That also means the cash availability is less in the overall market. Thus, individuals need to preserve the cash for essential and traditional expenses that can’t be performed without liquid cash.
During this time, a credit card can be the saviour. However, borrowers need to know how to use a credit card wisely during these times. They need to restrict the use of a card only at expenses like utility payments, grocery shopping, and medical expenses.
By making these expenses with credit cards, individuals can float the cost and preserve the cash on hand as emergency funds or for other urgent expenditures. Moreover, cardholders earn rewards points on different transactions, which means more use of the card can accumulate more points.
Now, depending on the reward programs and exchange system of the concerned card, borrowers can redeem these accumulated points to spend on other essentials. For efficient uses, individuals must know what to do with their card reward points. This way, card users can effectively preserve cash in a crisis.
- Clear off previous debt
Any unpaid outstanding can accumulate a significant payable amount. Thus, once the crisis begins, individuals need to clear off such debts as soon as possible to avoid paying anything extra.
Financial institutions start charging interest on outstanding balances after due dates. To use a credit card wisely, borrowers need to repay all the dues as soon as possible.
- Discontinue subscriptions
These days most individuals link their card to online streaming platforms. During the crisis, if individuals can remove their card details from these paid subscriptions, they can spend these amounts on essential goods.
Thus, individuals need to look for credit cards with several reward programs and a longer grace period to manage finances during a crisis. For instance, credit cards like the Bajaj Finserv RBL Bank SuperCard offer features like ATM cash withdrawal and emergency personal loan, which don’t attract any interest for up to 50 days and 90 days, respectively.
Furthermore, this financial organisation also provides pre-approved offers that help to simplify the credit application approval process. These offers are also valid on financial products like personal loans, business loans, etc. Applicants can check their pre-approved offers by submitting their mobile numbers and names.
Thus, individuals need to be well-managed and well-organised during a crisis when the cash flow is limited. They should be mindful of their purchases and prioritise their requirements beforehand.