Credit cards are widely used to day for convenience and it is an important piece in today’s lifestyle. But you are well advised to understand the usage and avoid the pitfalls
- First and foremost – avoid the revolving credit i e always pay the full amount before the due date. The interest rates here are very steep and not quite visible. You land up paying 30 to 40% p a. You may use for extreme emergencies and get rid of it as soon as you can.
- Stop using your credit card if you have got into the revolver till the outstanding balance is completely cleared.
- 0% EMI – Read the fine print or better still ask for explanation. There is nothing called zero percent. They will have processing fees which is the same. Go for it only when you see no processing fees and no interest.
- Do not ignore a small amounts initially. If you have a bill of Rs 20,000 they will say it costs only 3% I e about Rs 600 which appears small. But this is ridiculously high. In just a few month this will run very high beyond your imagination.
- Do not jump into premier cards. Please ensure IT is free for life. Never ever pay a penny for credit cards
- Has a competitive reward points system. Never ignore this aspect. You do not have to keep tracking your points every month but ensure they have a good package.
- No minimum usage requirement or balance requirements in the savings bank accounts
- Read and understand the rules pertaining to add on cards. Some funny bankers expect payments to be done separately for add on cards.
This is not only to save and conserve money but also to keep your credit score high. Credit card is for convenience and not for financing.
