How to use a Credit Card: Know your credit limit, Pay bills on time-Explained

New Delhi: Should you use credit card or not? The answer to this question will depend on your usage. If you use it smartly, then the credit card is good and if you spend unnecessarily and later on make the minimum payment on the due date of the bill payment, you can get stuck in debt trap and this card will become a problem for you. It is obvious that you would like to become a smart user to avail maximum benefits of credit. For this, remember these 5 things-

Checking credit card limit

First of all, before using a credit card, pay attention to the credit limit of the card. And never exhaust the limit as this will make your credit utilisation ratio i.e. CUR high. CUR means how much of the credit limit of your credit card you use. If your credit limit is Rs 1 lakh and you have spent Rs 60 thousand, then your CUR will be 60%. This will be considered a high ratio.

CUR should be kept below 30 percent. If the ratio continues to be high, your credit score will deteriorate and you will face difficulty in getting a loan.

Avoid paying minimum due

Always pay the outstanding bill of the card, avoid paying minimum due. If you pay minimum due, you will have to pay a lot of interest on the remaining bills. With high interest rates, your outstanding balance may increase significantly with each billing cycle. At present the average interest rate seems to be 3.5 percent monthly. Apart from this, there are many other charges which can increase the cost of your card. For this, check the Annual Percentage Rate i.e. APR of the card. With this, information about all charges will be available at one place.

Know about other offers and benefits 

It is important to know about the offers and benefits of the credit card you possess. These include joining bonus, fuel surcharge waiver, insurance cover, online and offline shopping, discounts etc. By making proper use of credit card benefits and offers, you can save money and take full advantage of the card.

Avoid converting your purchase into EMI

Avoid converting your purchase into EMI every time. With the EMI option, interest is charged and it may be much more than you expect. Therefore, if there is any expensive purchase and you are not able to pay for it till the time the bill arrives, only then convert it into EMI.

Keep checking the card statement

Keep checking the card statement from time to time. Many times the payment is not completed but the balance gets deducted from your card. Sometimes wrong charges are also levied. By checking the statement repeatedly, you will come to know about any such error and you can also avoid paying an extra amount.

 Credit Card: First of all, before using a credit card, pay attention to the credit limit of the card. And never utilize this limit completely because this will make your credit utilization ratio i.e. CUR high  Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today