In today’s age and time, almost everyone holds a credit card. While it is a convenient option for many of us, strangely, it is also a ‘cool’ option for a few, who think that flaunting a wallet with different credit cards in a party or at a shopping mall is definitely looked upon as ‘cool’. Credit cards, or plastic money, are a substitute for money and a convenient option at that. They make life easier, but with a caveat – “Do you use your credit card or does your credit card use you?” Here are some steps which would ensure that you use your credit card rather than the other way around.
Keep an eye on details
Do not sign on that dotted line unless you read the credit card’s terms and conditions, features and penalties. This would ensure that you do not discover any surprise fees at a later stage.
Use Cash or Debit Cards
Reach for your cash or Debit Card for day-to-day purchases. Using credit cards for regular purchases will increase your dependency on the card and you might end up over borrowing.
Avoid Impulsive
Purchases
Do not use your credit card to live beyond your means. It can impact your budget, divert you from your goals and also potentially result in a debt trap for you.
Know Your Payment Due Dates
Keep track of your credit card due dates. Missing the payment due date could cost you interest and most importantly, it may show up as late payments on your Credit Report. Better late than never is a passé…its better on time than late! If you pay your bills a single day after the scheduled due date, then be ready to pay the late payment charge. In case of credit cards, it either would be a fixed amount or a certain percentage of the minimum amount due. In case of loans, you would be charged with a fixed amount as penalty for paying late plus interest on the delayed payment.
And if you thought that the story of your late payments is known only to the bank then, well, here’s a surprise! The credit bureaus which store and update data of all borrowers also have a record of your payment history. Your credit report would reflect the fact that you have been delaying your repayments. It shows your servicing inability and acts as a warning signal for any lender that you are planning to apply for a loan. Even a single recent delayed payment can be a possible hindrance to your future loan or credit card application.
Never Carry a Balance
Credit cards come with high interest rates of 35-40% p.a. If you are making minimum payments, then you would not only end up taking more time to pay off the debt completely, but you may also pay much more than borrowed.
Do Not Use Your
Credit Card for
Cash Advances
It is the most costly way of getting cash! Cash advances do not allow for a grace period and this could be the first step towards a debt trap.
Here is an easy and quick way to find out if your credit card has been using you. If your answer to any one of these questions is ‘Yes,’ then your credit card is taking control over you.
n Are you cash stretched?
n Are you making minimum payments?
n Are you over dependent on your credit card?
Answer them and find out for yourself!!!
