Credit cards are being used daily. Many credit card users are not aware of the various aspects on credit cards. In this blog, we will be discussing the various things you must know on credit cards.
1. You must pay your credit card bills on time
You have to pay your credit card bills on time. In case you fail, you will be charged interest ranging from 24% to 36% a year on the outstanding amount. Not paying the credit card bills on time will affect your credit score.
Never withdraw cash using your credit card. Banks will charge cash withdrawal fees on withdrawing cash using a credit card. There will be no interest-free period, and you will be charged interest from the very next day.
To promote the regular use of credit cards, credit card companies offer cash backs, reward points and discounts. Make good use of these reward points and save your money while shopping. Cash backs and discounts directly reduce your cost of purchase. Reward points can be redeemed for goods and services in certain stores.
An interest-free period is a period between the date of a credit card transaction and the due date of payment. Make use of this period smartly and pay off your bills by the due date. When you have a credit card, you feel like spending more and more. Never use your credit card for making unnecessary purchases.
A credit limit is a maximum amount you can spend using your credit card. Make sure to maintain a low credit utilization ratio. Do not use up the entire credit limit as it increases your credit utilization ratio. If your credit utilization ratio is high, banks will think that you are credit hungry.
Your credit card statement contains all information such as the amount spent on using your credit card, interest charged by your bank and so on. You must review your credit card regularly; as doing so helps identify inaccurate entries. Whenever you find inaccurate entries in your credit card statement, you must report it to the bank immediately and reverse the wrong transaction.