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How to use a credit card wisely?

June 18, 2010  by: World  Points: 40   Category: Others  Earning $2.50   Views: 1104

Credit Cards are a wonderful means of plastic money. We can use a credit card for making purchases even if we do not have cash. In this article we will discuss few tips to handle and advantages and disadvantages of Credit Cards.

         

Credit Card- How to use it wisely



A Credit Card today is the most convenient and preferred mode of payment by one and all. It is true that credit cards are hassle free and we need not carry too much cash in our wallets if we are carrying a credit card. But it is important to know the correct usage of credit cards. This is because credit cards if not used sensibly can get a person into a difficult financial crisis.

It is believed that Credit card was invented almost 100 years back in 1914 and today is no more a luxury but a necessity of modern times. People today consider that credit cards are indicators of their financial health. Some people even use multiple credit cards from different banks.

But it is absolutely vital to be aware of the correct and sensible use of credit card. First of all a credit card holder must be aware about the billing cycle of his credit card. Usually all credit card companies give a time span of about 45-50 days to make the payment on the credit card. For example say your billing date of credit card is 10th of every month. So this would mean that if you make a purchase using your credit card on 5th of June you will have to make the payment on or before July 25 as credit card bill would be generated on 10th June and due date would be approximately 45 days from the bill date which would be about July 25. Generally if the payment is not done by the due date high rate of interest is charged on the amount due on the credit card. But some credit cards have some grace period as this grace period time will be offered by banks and they won't charge interest for this grace period. This can be of great advantage if used wisely especially in case of emergencies.

The credit limit of a credit card varies from one credit card to another. The amount available as credit in a credit card in a particular billing cycle is fixed by the bank. Banks offer different categories of credit cards like silver credit card, gold credit card and platinum credit card. Silver credit cards offer the lowest credit limit while platinum credit card has the highest credit limit. The different credit cards are issued on the basis of a number of factors like salary etc of the individual who has applied for a credit card.


Sometimes banks also charge few additional fees on credit card like membership fee, annual fee, renewal fee etc. It is important that before we apply for a credit card we check and have proper knowledge about all the charges involved in a credit card. We should opt for a credit card which best suits us the best and which is not likely to turn our finances upside down.


Always remember that it is sensible to make the payment of credit cards bill on a regular basis as defaulting on credit card bills can get you into a credit card debt .


Advantages of credit cards


Credit Card like all other things comes with their set of advantages and disadvantages. Here are a few advantages of credit card:

i) If you have a credit card you may carry little or no cash as most credit cards are accepted almost everywhere now-a-days and credit card serve as an excellent means of plastic money.

ii) Many credit cards come with grace periods for making payments which implies that even if you do not have funds for making payments for your credit card bill you will be given time and you can buy credit without any additional interest being charged and you can pay back the amount when you have sufficient funds.

iii) Credit cards are wonderful financial instrument as they can be easily carried anywhere and everywhere in a convenient and hassle free manner.

iv) Credit cards can be used to purchase number of products and services almost anywhere and everywhere even if you do not have enough cash to make the payment for your purchase.

v) You can avail the option of making payment of you credit card bill in parts but remember interest will be charged for that.

vi) You can revolve credit available on your credit card without making any payment for a limited period. it generally varies from 20 to 50 days depending on terms and conditions of the credit card.

vii) A credit card will allow you to make transactions in more than one currency and few credit cards will allow you to make transactions on a global basis.

viii) Many credit cards today reward points based on the usage of the card which can be redeemed to get gifts of even holiday packages.

ix) Credit cards can help you keep a track of your financial transactions. Credit card bills can be of great use as they include all the purchases made by you in a particular month.

Disadvantages of a credit card


Credit cards also have some disadvantages. So let us see what the disadvantages of credit card are
i) If you have a credit card your purchasing power is enhanced many times. But there is an evident disadvantage to this. If you have a credit card most of your buying decisions are always frequent and spontaneous to buy on credit. This can get you into trouble as you may get high credit card bills which might be difficult to pay.

ii) If you avail cash through your credit card a huge rate of interest is charged which may amount to as high as 35% to 40% at times.

iii) One of the major drawbacks of using a credit card is the security concern. If a credit card is stolen it can be fraudulently used to make purchases and you would have to pay the bill. To avoid such an unpleasant situation always remember to immediately report of loss of card to the credit card company so that the card can be blocked to avoid any fraudulent usage.


Tips on using Credit Card


i) You should remember that you should never disclose your Credit Card information to anybody and be vigilant when you are making purchases using your credit card especially when you're making an online purchase.

ii) When you get your credit card bill check the bill in detail and match it with transaction bill of your purchases throughout the month.

iii) When your credit card expires or is damaged dispose it off properly and cut it into several pieces with the help of scissors.

iv) If your card is stolen immediately inform the concerned bank and the nearest police station to avoid any fraudulent use of the credit card.




Comment(s)
Author: goodboy        
Posted Date: 06/26/2010    Points:5    

its a good article but must online users never trust credit cards again because of the annual charges for its use and its non flexibility nature that someone that does not even use it can get all his cash withdrawn by charges and situations.at the same time some companies cuts the money without sending the product.But in all cases,its that that everyone has one.

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