It is not surprising that people find the need to use credit cards for several different purchases. Credit cards have become extremely popular among people today you can be sure that it will continue to grow in popularity for the several benefits it has to offer. But you can only reap the benefits if you use your credit card in a responsible manner. On the other hand, if you misuse your credit cards then you may end up in debt.
Choosing The Right Credit Card
This probably one of the most vital questions you should ask yourself because you cannot just obtain any credit card, the detail associated with every credit card is different, for example, SBI credit card details will be quite different from HDFC credit card details,. Furthermore, there are various different kinds of credit card that you will find in the same bank, like a secured credit card, unsecured credit card, business credit card, and many more.
So here are some vital factors that you should consider when you’re choosing a credit card
Your credit score is nothing but an indicator of your credit worthiness, it is represented by number between 300-850. If your credit score is higher, then you are more likely to get your loans approved at a lower interest rate and if your credit score is low then the chances of your loans getting approved is not very high and even if it does, you will be charged a high rate of interest.
In simple words, credit limit is amount you are allowed to borrow from the credit card issuer and that amount mainly depends on you credit history. Having good credit score matters, because if you do then you credit limit will he high with a good interest rate and if you have poor credit scores then your credit limit will not be great and you are more likely to be charged with high interest rates.
Here’s yet another aspect that you’ll have to take into consideration-Interest Rate or Annual Percentage Rate (APR). Interest rates can be constant or flexible. Fixed interest-rate credit cards help you to manage your expenditures efficiently so you realise how much money you ought to keep for payment of your credit card bill. Variable/Flexible interest rate credit cards, as you might have suspected, may adjust their interest rates each month.
Credit cards with fixed interest rates have the option of modifying the interest rate in the event you do not pay your credit card bills on time or if you go beyond the set credit limit, and more. The credit card issuer has the option of changing the interest rate levied but he is also required to send you a notice when he is doing so.
Therefore, before you select a credit card you need to figure out the finance fee. One of the most popular approaches is the average everyday balance. The daily balances are calculated by adding and dividing it by number of days of the billing cycle.
Penalties and Fees
If you’re looking for a credit card, you have to take into consideration the fees and fines. Regular fees that you might be responsible for are transaction charges, charges to raise the credit cap, late fees, and so forth. Find just how much you’re going to have to spend and choose your credit cards. All in all, you’d prefer credit cards with decent rates.
With balance transfers, you can check for deals without any transaction fees and also no interest for at least one year. Also, don’t spend more on incentive schemes.
How Not To Go Into Debts While Using A Credit Card
You can easily go into debt if you do not use your credit card in responsible manner. Here are some tips to help you out.
Do Not Lend Your Card
Stop giving your credit card to buddies or someone else. Although it might sound like a pleasant thing to do, ultimately, you are held accountable for all credit card charges. If you surpass the credit limit you will have to accept the high transaction fees, and so forth, this way you’ll find yourself in debt and you could harm your credit score.
Spend On What You Can Afford
Adhering to whatever you can afford is among the most important bits of information that any financial advisor can offer you. As plain as it is, most people appear to get overexcited and spend the money on a number of things, only to discover out they have large amounts of debt that they’ll have to clean up. You could save yourself from a lot of financial issues by spending money the right way.
Don’t Do Balance Transfer Unless Necessary
People think it is a good idea to transfer balance from a credit card with high interest rates to a credit card with low interest rates. But what they do not realize is that it could pile and if you do this repeatedly you will required to pay higher balance when the fee is imposed.
Avoid Taking Out Cash Advances
For something like a credit card, there may be a desire to take out a cash advance. You must bear in mind, though, that you’ll be required to pay a large transaction fee and high interest.
Additionally, you may not be given the grace period to protect yourself from these fines. I n simple words, stop taking out a cash advances.
Paying Your Credit Card Bill
Now that you know what credit cards are, you should also know how to pay back your loans. Borrowing money from the bank to pay for services and goods sounds like a very good idea. But it is a good idea only if you can repay what you took with interest. If you do not back on time or exceed the credit limit then you will end up in a lot of trouble.
As mentioned above, it is important for you to pay credit card bills on time, this is one of the most important thing that you should, remember.
If you want to clear your loans as soon as possible then make try to make as many payments as possible. If you happen to increase the number of payments you make then the principle amount tends to go away faster. Making additional payments is definitely among the most efficient ways of repaying loans. The best part about that is that you won’t have to worry about incurring extra fees if you pay back your loans well before the deadline.
Making down payments for the reduction of the principal balance to be paid off is an outstanding move. In other terms, the debt is now smaller. As a result, you wouldn’t need to expend a lot of money to pay the interest on the whole principal amount. based on the monetary situation, think about making a 20 % to 30% down payment.
As you would’ve understood that owning a credit card is not as easy as you thought it would be. You should make wise decisions when it comes to using credit cards because if you don’t you will land yourself in trouble.