Credit Card Facts
Credit cards can be an important tool to make our life easier, but there are some things to keep in mind before you get a credit card and also when you start using it. There are advantages and disadvantages of credit card which you should know. So, here are some important credit card facts:
- Negotiate: If you have maintained a good relationship with the bank and have a good credit history and credit scores, you can negotiate with the bank to ask them to give you a credit card with as low interest rate as possible.
- Fees and penalties: The bank may charge a number of fees on your credit card like joining fee, transaction fee(in case of balance transfers or cash advances), fee for paying the bill after the due date or using the card over the credit card limit.
- Credit limit: All the credit cards come with a spending limit fixed by the bank who issued the card to you. The limit you get on your credit card depends on your credit history, credit score and also your capability to repay the money. If you want to use the credit card for almost everything you purchase, it’s better that you choose a credit card with a high credit limit and low interest rates. If you are a user who wants to use the card only for a few purchases or emergencies, you can take a credit card with a low limit and low interest rates.
- Auto debits: You can give your bank permission to auto debit your bank account every month to pay the credit card bills so that you don’t miss the payment due to any reason. In this way, you can save yourself from paying any late fees.
- Avoid cash withdrawals: There are interests charged on your credit cards if you withdraw money from it. The interest rates on your credit card bills are only charged after the grace period, but in case of cash withdrawal, the interests are charged as soon as you withdraw the money. So it is better to avoid withdrawing any cash with your credit card.
- Pay your dues on time: Pay the bill of your credit card as soon as possible and before the due date itself, to avoid paying any kind of extra charges on your credit card bill.
- Spending habits: Before you take a credit card, you must know how do you want to use it. There are users who want to use a credit card for almost all the purchases, whereas some want to use it only in case of emergencies. Some take a credit card because they are tempted by the reward points and incentives, some customers are responsible enough to pay the bill of the credit card in full in time and some just postpone the payment by paying just the minimum amount due. Depending on you usage you can choose a credit which suits you the best.
- International usage: If you are travelling out of your country, it is better not to use your credit cards there. Instead, make as many payments as you can with cash itself. There are charged induced on your credit cards when you use your credit cards out of your home country.
- Loss of credit card: If you lose your credit card, it is better that you inform the card issuer as soon as possible so as to prevent any fraudulent purchases on your credit card. Your credit card will be blocked when you inform them about the incident and also you will not be held responsible for any purchases after you report your card stolen or lost.
- The interest rate: Knowing the interest rates charged on your credit cards is important. If you make all your bill payments before the due date, there is no interest rate that you will have to pay, but if you delay the payments or roll over the payments to next months it is important that you do it by keeping in mind the interest that the bank will charge on your credit card.
- Incentives: You get incentives on your credit card when you use it properly by paying the complete bill within the grace period itself. These incentives include reward points, discounts on various purchases, loyalty points etc.
- Convert to EMIs: There are situations when you are unable to make the full payment of your credit card bills due to some reasons. In such cases you can ask your bank to convert the amount in EMIs so that you can repay the amount slowly on regular intervals.
- Credit card frauds: With so many frauds going on in India, it is your responsibility that you protect yourself from any kind of phishing or fraud of credit cards. Do not share any of your credit card details with anybody even if they tell you that they are from bank.
By keeping these credit card facts in mind, you can protect yourself from any kind of bad experience by using credit cards.