How To Utilise Pakistani Credit Cards To The Fullest

Getting credit cards is a pretty big deal in Pakistan (when you’re young and ambitious). From buying miscellaneous assortments to paying subscription fees online, credit cards bring a somewhat fancy feel to typical Pakistanis. But where do we go, when the motive to take full advantage runs amok? Here’s how to utilise Pakistani credit cards to the fullest!

In a nutshell, the best way to use a credit card is by using it only when you need it. Charge only what you know you can comfortably afford to pay back. If used this way, credit cards provide an awesome way to pay for daily expenses!

The credit card system can help you build credit, earn rewards, pay off debts, or finance a purchase to pay off over a prolonged period of time. Here’s an advice: if you’re not careful, a credit card could also lead to high interest charges, increasing debt, and a ding to your credit health.

In Pakistan, the universal banking concept of ‘grace period’ is truly a godsend for people who use credit cards. By definition, a grace period gives you the opportunity to use your credit card as a short but interest-free loan. As long as you pay every rupee you charged last month before the due date, you won’t pay interest on credit card purchases.

Sooner or later, however, many people do not pay their credit card balance in full each month, turning their credit card into a revolving credit line. Finance charges (interest) then accumulate on the unpaid credit card balance each month. Eventually, you end up in a tight spot, and the actual reality of relying on credit cards kicks in.

Here’s How To Utilise Pakistani Credit Cards To The Fullest | Play It Safe

While a credit card can provide numerous benefits when used strategically, it can also lead to high interest charges, increasing debt and a negative impact on your credit if you’re not careful with how you use it.

Use Your Credit Card Strategically

Make your payments on time. Your payment history is one of the major factors that influences your credit. If you make your monthly payments late, it can negatively affect your credit scores, and you’ll likely be charged a late fee.
Pay your credit card bill in full and on time each month. Paying off your balance in full and on time can help you avoid incurring high interest charges. If you can’t pay the entire statement balance, pay as much as you can and be sure to make at least the minimum payment on time.
Buy only what you can afford to pay for with cash. This can help you avoid overspending and help you stick to your budget each month.
Stay well below your credit limit. Your credit utilization ratio — the ratio between the total balance you owe and your total credit limits on all your credit cards — is one of the criteria used to calculate your credit scores. Typically, a low ratio has a favorable impact on credit scores, while a high ratio has a negative impact. Aim to keep your credit utilization ratio below 30%.

Pay Your Bill In Full Every Month! | How To Utilise Pakistani Credit Cards To The Fullest

If you don’t want to end up on a bank’s bad side, you need to stay out of credit card debt altogether. That means charging only what you can afford and paying your bill in full every month — or even a few times a month if it helps you stay ahead of it.

Doing so may seem challenging, but this is the number one rule of using credit cards instead of letting them use you; it is truly the only way to avoid getting into credit card debt, and the only way to avoid paying interest on your purchases. (Seriously, you don’t want to do that: A 20%-off sale means next to nothing after you get whacked with an 30% interest fee!)

Use Your Credit Card As A Compliment To Your Budget

If you’re disciplined enough, you can use a credit card as a compliment to your budget. This strategy usually involves creating a written budget, then using your credit card for purchases until you work through your predetermined spending limits. This is a great way to earn rewards for purchases you’d be making anyway, and to gain certain protections that only credit offers.

To stay on track, make sure to log in to your account once per week or every few days. Seeing your spending on your computer screen – in black and white – is sometimes the only way to let how much you’ve really spent sink in.

Paying For Large Purchases Over Time | Pakistan

Credit cards let you pay off a big purchase over time, which is a form of financing. But, unless you’re using a card with a 0 % intro APR, it’s an expensive way to pay.

Considering using a credit card to pay off a large purchase over a number of months? Consider your options carefully:

Can you save up the money ahead of time and pay cash?
Can you qualify for a credit card that offers a 0 percent intro APR on purchases for 12 months or longer—and pay it off before the rate skyrockets?
Would a personal loan be a more affordable way to finance the purchase than a credit card?

We don’t recommend borrowing money at regular credit card interest rates if you can help it. Honestly, we don’t recommend borrowing money AT ALL.

Unfortunately, there are times in life when no other options will work, so you absolutely must make a large purchase immediately and pay for it over time. In those cases, a credit card is a convenient route, though it may be very expensive.

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One of the benefits of credit cards is fraud protection. If your credit card is hacked—which happens in the most unexpected of ways—money isn’t coming out of your bank account, and you don’t have to pay for bogus charges.

While debit card fraud is eventually refunded, that money still comes out of your account at first. This is one of the big reasons we think you should rethink using your debit card as your primary form of payment.

Credit cards also come with purchase protection. If a merchant doesn’t come through, you’ll get your money back.

Well, there you have it guys! This was all about how to utilise Pakistani Credit Cards to the fullest. We’ll be updating this article in line with future developments, so watch this space!

If you have any questions, feel free to leave a comment in the section provided below. Good luck!