Credit Card Concerns, now no more!
Credit card usage has increased manifold in the past 3 years. We have also seen the rise in credit card frauds leading to minor losses and if few cases, major ones leading one into security threats as well.
Credit cards are very easy to use, helping you avoid carrying cash and live an easy life with payback options inflexible timelines. These are also extremely useful in financial emergencies. If bills are paid in time, credit card makes you eligible to get loans by having you level up a great credit score. Maintaining a strong credit history is a prerequisite as well.
To the downside, credit cards are a lot more than all other plastic things which have to be carefully, responsibility used. There are few frequent and easy to make credit card mistakes which we need to avoid. Here we are, giving you heads up on the most important ones.
1. Just pay the whole thing off-
Instead of paying only the minimum amount needed to refrain yourself from getting fined, it is always a good idea to pay the whole amount of without keeping any balance with the credit card bank whatsoever. Keeping balance, also known as revolving, is the best way for a credit card company to get a big fat interest off you. You can be charged 24 to 48 percent of interest annually making it the most expensive form of debt. If you lose out on your credit free period, you may also take a hit on your credit score in totality.
Basically, it is best if you plan it out and spend only how much you can afford to pay back in the immediate next cycle. Always remember, when you swipe a credit card, you are taking a short term loan from the bank which is obviously adding interest over it.
2. Precaution and care for the safety parameters-
This is of utmost importance in the era where frauds are at an all-time high. There are gangs of techno freaks literally waiting to leech onto your bank account. Beware of giving out your credit card details, security number, zip or PINs to avoid frauds. The classic way of credit card frauds is telecallers posing as bank employees. Using your credit card in public Wi-Fi zones and other public places also needs the utmost care to be taken in order to avoid financial losses. Checking the amount before entering your pin, making online transactions on secured portals, never revealing your credit card details along with pin or zip codes over telecalls, out in open are basic ways in which you could safeguard yourself.
3. Make a wise choice on the bank offering your credit card-
Cashback schemes and reward points are the most interesting. Isn’t it? With a rise in the world of coupons, we are almost addicted to getting discounts and deals. On the service provider side, due to the fierce competition that every bank is facing, dishing out on exciting rewards and services is a must as well. In the ocean of choices, how to choose the best one for self? Make a note of your interests and spending patterns. Few of us are hardcore travelers, few are foodies and few are entertainment freaks who love to watch all possible movies released. What is it that you spend maximum money on? Your interest should match what the credit card has to offer.
4. Holding onto the reward points-
As fierce as the competition is, the banks offering reward points and deals often change patterns making your purpose behind holding those points invalid. It is always wise to not wait to spend your big chunk of collected reward points for that fancy vacation that you plan. If a certain amount of reward points can give you a certain amount of discount on your airfare today, you would need a lot more points to get the same discount after a couple of months. When you have it, take it!
5. Cash withdrawals from your credit card-
Withdrawing cash from your credit card is like getting expensive cash at a very high cost of service charges. You may end up in almost up to 4% of charges on the money you withdraw which amounts up to 35% to 40% annually. Special care is to be taken when you are traveling internationally. The best option to withdraw cash through your debit card or using a bank cheque alone.
6. Maintaining an interest-free period-
If you are looking forward to maintaining a great credit score, then ensuring that you have an interest free period maintained on your credit card is of utmost importance. Ensuring that you do not revolve credit is certainly a way but making sure that you do not overspend and utilize the entire limit given to you is also another way out. If you are watchful with the way you spend, then you could also ensure the same by having two to three credit cards- in which you do not exhaust your limits. Also instructing your bank to debit a certain amount every month from your savings account is a great idea to not let delayed payments, penalties or minimum maintenance charges.
I hope this article brings your credit card habits to attention and helps you plan better, plan wiser!
