Manage your credit card!

By abithadeepak | July 12, 2014

A credit card is a useful tool, when managed judiciously but a lurking danger if you mismanage it.  One of the first things you need to keep in mind, is read the term and conditions when you apply for a credit card. It could be a laborious process but something that has to be dealt with, to protect yourself from any rude surprises that might be in store for you in times like this.

One hears stories of money being taken from the savings account of a person who has a credit card with that particular bank! Well, banks are allowed to do so, when a default occurs, the clause is covered in the terms and conditions. Banks also have an auto debit facility to claim a minimum payment on credit borrowed, if in case your account does not have enough funds, banks are allowed to levy a fine, which could be ridiculous amount that is nearly half the amount you borrowed! For eg. It’s not funny when a fine of Rs.400 is charged for a Rs.500 credit borrowed!

Credit cards can be useful when you make a profit out of it! Now, how is that possible? Well, it all depends on the kind of card you purchase, its best to opt for a lifetime free credit card that does not have an annual fee attached. Also get a card that matches your lifestyle. If you shop a lot, see that your card offers a lot of discounts and cash back rewards for the all the shopping you do with a card. If your job allows you to make frequent trips, get a card that gives you several travel friendly schemes on eating out, hotel stays and airline ticket discounts.

Though the whole point of having a credit card is to provide you with cashless convenience, it makes money sense to decide, when, how and why you should use it. Never get tangled in the web of debt, especially when it comes to credit cards. Though its an ideal resource to tap into, when you need to ramp up funds quickly, the interest rates charged on a credit card are much higher than even those charged on personal loans. Remember that cash withdrawals from an ATM with your credit card will be charged a processing fee of around 2% and an even higher rate of interest than your regular purchases on the card.

Most credit cards do offer an EMI facility to pay any loan you take on your credit limit. It normally takes just one or two business days to obtain this loanand this can even be arranged over the phone with no documentation. However, the difference lies in the high interest rate charged, which can be as high as 30-42% as an annualized rate. The cards that offer a comparatively lower interest rate in the range of 22-26% most often do not have an EMI facility for repayments.

Though credit cards seem like a good bet for short term fund requirements refrain from using it, unless you can make the credit card usage count for some kind of benefit. Using your credit cardpurchases for an interest free period is fine, however remember the bank can do away with interest free periods anytime it chooses to and also hike the interest rates, according to its free will. Hence, be wary of a credit card and use it sensibly.

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About Abitha Deepak

Abitha was formerly part of the Content team at BankBazaar.com. She has a Master’s degree in Mass Communication and has 14 years of experience in Journalism and Creative Writing. Armed with strong writing and conceptualisation skills, Abitha has written on Loans, Credit Cards and Money Management.

23 thoughts on “Manage your credit card!

  1. Prof.P.N.Satish

    This is quite informative and useful for those who use their credi card indiscriminately. Debit cards are much safer for a person like me, a teacher by proffession and can manage with the cash limit offered by the bank.

    Reply
  2. Manjunath

    Yes, banks lure money out of layman from credit card transactions. Thats to reason i have stayed back from owning a credit card, i depend completely on debit card with what i have……….why opt for more money which is not earned by me 🙂

    Reply
    1. RakeshB

      interest free period can be used quite effectively by credit cards. whereas debit cards do not have this facility.

      Reply
  3. Parveen Chawla

    A credit card holder should always remember the payment due date. Before due date pain in full not in parts

    Reply
  4. Honey

    I am unable to use my debit card for international transactions hence I need a credit card. Please advice.

    Reply
  5. dr.s.karmaker

    Pay credit card payment as soon as possible, otherwise you will forget the due date.

    Reply
    1. rakeshb

      Best is to have Auto Debit or ECS system, there is no need to remember the due date

      Reply
  6. Satish

    People should know the statement date in order to get 45 days credit period., Accordingly the purchase plan has to be made.And also should try to cultivate the habbit of paying the total amout due!

    Reply
  7. Raj

    Credit card builds you credit scores which is very helpful in future to get a loan from banks.

    Reply
  8. ramana

    it is very common all banks print terms and conditions in apllication in very small fonts y so,is that banks are not cheating by diong so.almost all ads in tv spell terms and conditions in different vioce y so.policy of credit card itself is not justified clearly by many banks.y other western countries tansactions run only on credit cards sucessfully.think about the systems

    Reply
  9. Prakash

    The article is informative. However, if anyone uses the Credit Card with prudence and pays the dues in time, then it is all right. Otherwise, all the Banks are charging heavy penalties. Even if you pay, some times, they make mistakes and the help line is useless. It is better to xerox the cheque issued to your c.c. bank and have a on line i.e. e-mail touch with the customer care of the bank. Sometimes, they issue a free card in the name of customers wife and if you do not require it and not informed the bank, they charger some fees and if it is not paid they inform your name to the CIBIL. It is very dangerous which the client does not know and when you go for any Bank loan it obstructs you/ or you do not get the Loan at all.

    Reply
  10. ramamurthi

    iused credit cards 9 years ago all is well ipay online payments nearly sixty numbers they are well , thanks to the bank credi card .teams. the statements comming in timely. the bank pay slips ,importent news ,and some papers are printed in small letters. please look this inconveyance.

    Reply

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