A credit card is plastic money issued by banks and credit card companies which allow you spend now and pay later. This card is really very useful as you can use this when you are in an urgent need of money. Credit card lets you covert high-value purchases into easy EMI's. Now, in India, people using credit cards are rising rapidly. The sad part here is not everyone will use the credit card in the right way. Some people make a lot of mistakes while using their credit cards and end up in a debt trap. So, it is very important to be careful while using the credit card. In this blog, we will discuss how to use your credit card in the right way.
See Also: Do you use your debit and credit card for online shopping?
Here are certain things you need to follow to use the credit card in the right way
1. Pay your bills on time
The first step towards using your credit card in the right way is paying off your credit card bills on time. If you spend using your credit card make sure to pay the bill before the due date. If you do not pay your bills on time, you will be charged late payments penalties and the interest will be charged on the outstanding amount.
The purchases you make in the next month using your credit card will not be interest-free. Apart from all this, late payment of credit cards will have bad effects on your credit score. If your credit score is low, you will face a lot of problems while availing loans in the future.
2. Never pay the minimum balance due
Many people just to escape from the paying late payment penalty; simply pay the minimum balance due. The minimum balance due is the minimum amount you have to pay by the due date. This will be around 3% of the total amount you have to pay. Paying minimum balance due will just save you from paying the late payment penalty, but it will not save you from paying the interest on the outstanding balance of your credit card. The interest charged on the outstanding amount will be as high as 2% to 3% a month.
3. Never share your credit card details
The biggest mistake some of the credit card holders make is sharing their credit card details. One thing you have to keep in mind is no bank or credit card companies call, asking your credit card details. You have to be careful while handing your credit card while making payments at the merchant outlet and petrol pumps.
4. Never withdrawing cash using your credit card
Withdrawing cash using your credit card is the biggest mistake you can ever make. When you withdraw cash using your credit card; you will be charged cash advance fees which can be as high as 2.5% of the amount withdrawn. You will also be charged interest of 2-4% a month on the amount withdrawn. Another important point is the interest rate meter on cash withdrawals starts from the very next day.
See Also: Why credit cards are safer than debit cards?
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