Know how to use credit card optimally


Credit card can be used for various purposes. It may really advantageous in certain circumstances. At the same time, credit card lures its users to the debt trap. So, to enjoy the advantages of credit cards, the users must follow some tips. Know these tips from the author.

Nowadays people extensively use the credit cards for many purposes. It is very convenient in various occasions including emergencies. At the same time, extensive use of credit card by users brings a very real risk of falling into the debt trap. Credit card users must be very careful to avoid falling in a debt trap. This article discusses how to choose a good credit card and also how to optimally use the card.

Check the fee of the credit card

Credit cards may have various fees like joining fee, annual fee, late payment fee and cash advance fee. At the time of choosing a particular credit card, the prospective users must shortlist those cards which have no annual fee and joining fee before considering other relevant factors.



Always remain within your credit limit

This is very important. A credit card user must always remain within his credit limit. Otherwise, he would be charged with a hefty an over limit fee. The experts always advise to choose a credit card which allows a credit limit of at least three times more than what the user is likely to spend in a month. It is very important to keep the credit utilization low.

Pay in full before the due date

The credit card users must pay the due amount completely well before the due date. If this is done, then interest will not be charged on the balance amount and the user will be able to avail the benefit of grace period which the credit card company offers. A low credit utilization ratio improves the credit score and will help sanction of a loan in future.

Check the EMI facility of the credit card which yo chose

If a credit card user purchases a costly item like television or refrigerator, he may like to use the credit card to pay the amount in EMIs. In such a case, it is necessary to understand the EMI facility, the processing charges and other charges. The experts always advise to negotiate the processing fees in the cases of EMI purchase.



Don't use a credit card for reward points

The credit card users must not use credit card excessively for reward points. Reward points and cashback facilities can be enjoyed only when the due amount is paid within the time. If the user has to pay fine for late payment, the credit points and cash-backs won't have any importance. While using credit cards, the users must remain conscious not to fall into this trap. Don't purchase useless products and visit restaurants for the sake of cash-backs or discounts.

Build the credit score

If the credit card users default on their loans or payment of credit card dues, their credit reports would definitely have negative reports. In that event, they would face difficulty in getting loans. The financial experts advise users to opt for secured credit cards. It is relevant to state that a secured credit card is secured against a fixed deposit from a bank.

Final few words

Credit card can be a boon or bane to the users. It entirely depends on the individual user. The credit card must be used as a credit mechanism and a source of credit during emergencies. But the users must pay the credit card bills in time to fully enjoy the advantages of the credit cards.


Article by Partha K.
“Those who will not reason, are bigots, those who cannot, are fools, and those who dare not, are slaves.” - George Gordon Byron

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Comments

Author: umesh31 Oct 2018 Member Level: Diamond   Points : 7

A nice article by the author explaining the subtleties of using a credit card optimally. It is a very useful article for all those who are using such cards.

A credit card is one of the most amazing and well-tailored financial instrument. It is being used by a large number of people world over. Now slowly its use is going down as people have started to use debit cards at merchant locations. In debit card the payment is instant and the facility of about 45 or fewer days delay period for making payment is not available. At the same time, they do not have hassles of tracking your credit card and paying the outstanding in time etc. As any late payment attracts high penal interest.

Those who wish to go for a credit card should note that for basic cards nowadays there is no annual fee. Even if it there, you insist on its waiver and they will oblige. Another thing is time to time the banks join hands with online sellers and announce attractive discounts on certain merchandise purchased through these credit cards. So that can also be availed sometime.

Some heavy users of credit cards keep money in advance in their credit card account. This is done by pre-paying some lump sum amount depending upon their monthly usage and avoid the hassles of keeping track of the last date of payment. They use their credit card just like a debit card. The only difference is that the account where a debit card is linked gives you some interest on your outstanding balance. But credit card companies do not give that because of obvious reasons for providing an optional delay period for your payments.

Author: DR.N.V. Srinivasa Rao31 Oct 2018 Member Level: Diamond   Points : 7

The credit cards are playing a very important role in the modern world. They help to maintain the purchase capacities of the people. These days we will find very rarely people without a credit card. But the way we use our credit cards decides our financial health. One should never go for purchase as there is a card with a credit limit. But we should assess the repaying capacity also. If one fails in repayment in time the amount to be paid as interest will be very high. But use the credit card wisely and systematically. It will help us in maintaining the financial position correctly. Many times I have seen many people unnecessarily going for the purchase of items with cards and getting defaulted. This is a very unwanted trait. No one should get habituated to this type of usage. The author has given very good tips for the usage of the cards and a useful article.



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