It is simple really, as far as taking care of plastic cards is concerned, yet so many of us abuse the flexibility of the credit card. Usually, this is due to paying off debts or extraneous spendthrift activity. If this applies to anyone then it should be a firm decision to simply stop using the card, or find ways to make the card work better. That is to say, other than being a financial sinker for the wallet after a few years of constant spending.
Most of us are aware of how hard it can be to avoid using the plastic credit pals like Visa or Master Card when its time to pay the fiddler. It is right there in wallets upon entering shops. ‘Hey, I’ll take one of those, no cash in my wallet, but I have my trusty plastic buddy.’ This is probably a very familiar thought, and not one secluded to the husband’s spouse on a weekend shopping spree. Let us face it, all people will spend more than they can afford at some point in their lives. These helpful hints on the use of credit cards will help avoid unpleasant debtors:
- Do not let the balance build.
Ensure that the outstanding amount is paid off quickly, or the card will suffer interest penalties. Not to mention the insurance, if the option for insuring the payments against unexpected unemployment, as this can really add up. This accrued interest will be noticed once the card is used often, and a hefty debt rears its ugly head.
- Many credit cards offer rewards to the consumer that can be spent on travel, discounts, and other ‘rewards through points’ programs.
Many of the leading brands will support this point system. Examples are City Bank, Standard Chartered, ICICI and American Express.
- If the credit card currently owned has a high interest rate – get rid of it.
Transfer to a card offering 0% for 6 months, or even some others that give a year. Heavy credit card users will notice the benefits of this simple manoeuvre over an annual period.
- Recognise and stay within personal limits.
Use the amount of household income as a frame of reference to establish this. How much can be spent on the card before monthly bills exceed monthly expenditure? That magic word, or bane of family life, called Christmas soon comes. This is when most people tend to go ballistic and attack the trusty credit card. Care should be taken to ensure that limits are withheld. Spendthrifts do not understand limits, and should avoid credit cards at all costs until cured of the spending bug.
- Avoid applying for too many cards, as payments can become difficult.
Measure the monthly income against the card limits. If they almost match, or the household income monthly falls below the card limit, a good general rule is to only possess one - or at the most - two cards. This may sound generic and too simple. Work it out. If the card is maxed, and the income falls below that amount, the card will be demanding a hefty minimum payment which may mean that there is no further flexibility on the card as it is maxed, plus there is a staggering minimum amount to pay now.
- Avoid late payments.
Pay the minimum amount plus more. If you cannot manage more, just pay the minimum, but this means that card usage should cease until available income has increased. Always try to pay the debt off completely or as much of it as possible rather than just paying the minimum amount monthly.
- Find a card that is useful when needed.
Don’t just take a card because it has a Rs1,00,000 limit; question that - ‘Do I need that much’ and ‘what will I specifically need the card for??’ These are important questions. If discipline is a problem, the card will become a problem. Take care and use it for needful things and not as a daily spender. That is the path to debt doom…
Use credit cards wisely, and they will be a versatile friend. Do this not, and they will become apostates of hell. Be wise, and be sensible, and credit cards will always be a useful aid for every financial need.
Article Source: Credit Card Guide
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