Credit card has replaced currency notes and has found a permanent place in our wallets however it is an unsolved mystery for many and thus resulting into hundreds of complaints about excess fees, charges since its poorly understood even though banks give users all the needed information in form of a printed “terms and conditions” that come with their card kit.
Customers generally focus on benefits that come with credit cards and ignore the several important fine lines that come with it.
Its totally up to the credit card owner to use, manage and make best of benefits that a card has to offer and choose best for oneself.
Here are five things you should know and do about your credit card that you are unlikely to hear from the sales officer :
1. There is a fixed billing date and a payment date :
Keeping track of these will help you manage expenses and repayment and avoid any surprises. Double check the due date and choose auto debit option with your bank however do read and verify credit card statement on every month before due date and respond to bank in case you find any expense shown not made by you. Poor repayment record would lead to poor CIBIL score and hence any chances of limit enhancement, card up-gradation or any loan approval can be effected.
Always treat it as a loan that you have to pay back.
2. Remember your credit card number :
It is recommended to remember your card number so that it can be reported to the bank in case of loss or theft. Also it can be saved in your mobile phone so that you don’t have to pull it out of wallet every time you shop online. However you also need CVV and date of expiry for usage.
3. Always use OTP :
Internet is a friend and an enemy as well. With online frauds on rise, its always recommend to use OTP (One Time Password) in place of a fixed password saving you from all the possible misuse of your card and hard earned money. Also keep password to yourself and separate from your card.
4. Check charges and annual fees :
Though many banks come with life time free cards however few premium cards come with annual fee or spend clauses to make it free for the starting year or years to come.
Sometimes its difficult to understand how interest or fees is calculated. Hence its a good practice to understand late payment charges and interest rate, cash withdrawl from ATM charges, charges on over spending the limit. Avoid cards with annual fee and charges.
5. Check offers and reward points :
To add loyalty and attract new customers, banks these days have come up with several lucrative tie ups and reward clients for using their cards.
Make best use of it by checking the offers available to get best of discounts and accumulate reward points to exchange it for the value and exchanges pre defined by bank for particular cards.
Dont’s for credit card user :
1. Never share your credit card details :
Never share your PIN with any one, even with bank officials or customer care representative. Sharing can lead to leak of sensitive information and any possible fraud can occur. Precaution is better than cure.
2. Never use card on a public computer:
Never trust all websites and make sure you are routed through a reputed company payment gateway and notice “https://” before website name.
A public computer can be loaded with viruses or a tracking software to store your private information. Click “Never” when browser pops up to ask save password for this site.
Use never save [password option in browser for all transactions.
3. Never use full Spend limit :
Its the upper limit set by card company however its always advisable not to fully utilize it as it may hurt your credit score and also you end up spending more. So leave card home next time you go to shopping mall to avoid urge to buy things that you don’t need. 50% usage is recommended for a healthy CIBIL score.
Try to use cash whenever you can for small purchases like : food, clothes, movies etc. You will buy as per your need not desire. Its not extra money that you have, you have to pay it back mate.
4. Never make minimum charges due as payment :
This will save you from delay in payments reflecting in your credit report however will effect credit score and interest payable accumulates month on month. Call credit card company to come up with some solution if you have any problem in repayment to avoid being over charged or categorized as a defaulter. You can always negotiate lower rate with card company if you have good payment record in past.
5. Never use card to repay other debt :
Personal loan is cheaper than credit card since its close to 13-17% depending on lending company and is monthly reducing.
Also rotating balance transfer from one card to other is not a good practice as it will create a vicious circle of multiple repayment to multiple banks leading to bad financial health.
If spent and used wisely, credit card has emerged as a powerful financial planning tool as it does reward the wise and educated client in its own ways.
Happy Spending !