Do’s and Don’ts with your Credit Card | Creditseva


Many consumers in India are hesitant about using credit cards. This is based on the experience of friends, relatives and all stories being passed on by various other people. Yes, it is crucial for you to know the rules of the game before you start playing with the same. Learn the rules of the credit card game, to stay away from the troubles it can create. Know the dos and don’ts makes a healthy user.

The don’ts of the credit card game:

  1. Read the terms and conditions before you apply for a card: Choosing a credit card should be based on the value it gives you. Check on the annual fees, interest rates, rewards and benefits, etc. when you choose your card. Compare the cards offered by different companies before you get one.
  2. Choose the purchase smartly where you want to use your card: Do not use your card for routine and ordinary purchases. Regular purchases like food, clothing, grocery, gas, etc. are better not purchased on credit card, as it only increases your balance. Do not use your card as an alternative to cash. Instead, use your debit card.
  3. Making only minimum payments can prove risky: Paying the minimum balance due on your card, results in endless debt. This only increases the time that will take to finish your repayment. Moreover, paying the minimum increases the interest that you pay on your balance. To make a quick and cheap pay off, may more than the minimum and as much as your budget permits each month.
  4. Don’t use the credit card to buy things out of your financial reach: Buying things which are out of your budget is the shortcut to falling into debt. Ensure that you buy only things which you can afford. Make sure that you buy things on your credit which you can pay off. Align your purchases to your income.
  5. When you close your credit card account, know how it impacts your credit standing: Closing your credit may sometimes hurt your credit score. When you still have a balance to repay, never close a card. This will negatively impact your credit score.

The do’s of the credit card game:

  1. Make smart moves about buying items you need:In relation to those you simply want. Using your card effectively means understanding which things just want and things which you need.
  2. Choose wisely the items which you buy on the credit card: Responsible use of credit card means buying the thing you ‘need,’ not just what you ‘want.’ Ensure you buy only things which you need a credit card.
  3. Limit your credit usage to 30% of your limit: Your credit score depends on the debt you have on various accounts. The more unpaid balance you have in your card reduces your credit score. Keeping your balances not only helps to maintain a good credit score, it helps you to manage the debt better.
  4. Negotiate with the credit card company for a lower interest rate: Your interest rate on the card determines how much of a balance you can carry forward to the next month. Keep a periodic check on the interest rate of the card.
  5. Thoroughly review your credit card statement monthly: Check on each transaction on the credit card statement. Make sure you are charged correctly on each purchase. Ensure that every repayment you make is applied appropriately. Confirm that there are not the unauthorised transaction and ensure to report them immediately if any.

Wise usage of your credit card can help you towards a credit score of 800 plus, which means you are financially healthy.

Updated: November 29, 2016 — 7:14 pm

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