Once you have realized that it is probably the right time for you to own a credit card, you need to chalk out a plan to manage it accordingly and efficiently. We give you eight simple and compact ways to manage all your credit cards. Don’t keep on buying one card after another. One should ideally own only one major to-be-used-most credit card.
Here are eight simple and compact ways to manage all your credit cards.
1. Don’t keep on buying one card after another. One should ideally own only one major to-be-used-most credit card.
2. Go for a credit card for which you are not required to pay any annual charges or fees. It should also offer a low rate of interest and a sufficient grace period of twenty to thirty days for you to wrap up payments of new purchases well before they charge you any interest. You shouldn’t ideally go for credit cards that offer annual processing charges. Credit cards offering low rates of interest initially drastically shoot up the rates after a while. You can also access various websites on the internet to get to know about the latest deals in credit cards. One good example is http://www.bankrate.com/
3. You must make sure that your credit card has been secured by a deposit in the bank. This means that you should be having sufficient money in your savings bank account that matched up to the credit limit in your credit card. A credit card that is secured will help you with flexible and smooth credit card and banking operations, thus leaving you with a healthy credit history.
4. It is advisable to not use your credit card except in cases of dire emergency where you will at least be able to give yourself sufficient time to gather funds and repay. You should not use the cards for expenses that you can’t write off at that very moment. We just hope your emergencies won’t include eating out and shopping!
5. Pay all that you have to along with all the charges well in advance and days before the due date of payment. If you can write off the entire payment, nothing like it. Although if you can’t, then just try and pay a little more than what has been fixed as minimum payment so that the interest and other charges remain low.
6. Your credit card is nothing but a loan that you are availing. You must ask yourself before you take out your credit card out of your pocket whether you would actually visit a bank and apply for a loan for the thing you are using the credit card for.
7. You must also deduct your expenditure by the credit card on your purchases you’re your current account to leave you with sufficient amount of money to be paying your credit card statements.
8. Never make use of the cash advances from your credit card except in cases of dire emergencies. You will most probably have to pay some charges for this money with the interest being deducted immediately, at that very moment.
Alerts
What's the worst thing to do with your credit card? Use it to withdraw cash from the ATM, says a financial expert. In your monthly credit card statement, there is a mention of cash limit. That is the extent to which one could withdraw cash using a credit card. But the googly is the interest rates. It's actually a very expensive proposition to withdraw cash as the interest rates on such withdrawals fall in the range of 40% on an annual basis.
Usually, the credit card company mentions the interest rate as a percentage per month which typically varies from 2.7-2.85% per month. And since this interest is compounded monthly, the effective annual rate of interest tends to be anywhere from 38 to 40% per annum.
Essentially, credit card companies charge the same interest rates for cash withdrawals made through credit cards and for rolling over credit card balances. But if one pays the entire amount on due date, one gets around 30-45 days of interest free credit. But what is important to know is that rule doesn't apply in case of cash withdrawals; the credit card company levies the interest rate the moment you withdraw the cash.
Cash withdrawals can also attract an additional withdrawal fee. This charge falls in the range of 3-3.5% of the withdrawn amount. That will be added along with the interest rate to your bill. Therefore, unless you have emergency needs, do not withdraw cash on your credit card. The better option though is to go for a personal loan. You should look at this option as the last resort. If it's a planned expenditure and you don't have sufficient liquidity then a personal loan is be a viable option."
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