Credit Card – Guidance to Select, Check & Track

Credit cards are becoming increasingly popular now days, with the increasing standard of living of the people, better payment system and availability of the cards at the door step. Since the rate of interest on outstanding with other charges are deceive/complicated in nature, you got to be smart in selecting, using and tracking your card to avoid charges.

Let see how to go about it, though there could be many ways to save on the cost here we will discuss only 4 ways to avoid such charges by selecting a better credit card and by using it in a disciplined way.

1. Always pay your outstanding amount in Full and before the cycle of the card ends: This is one area to look into, and probably is one of the most important formulas to avoid unnecessary charges. Every individual credit card has its own due date/cycle and it is always advised to have complete knowledge about your card cycle/due date. A check; always clear your balance before the cycle of your credit card ends / restarts. . If you keep on running your balance month to month basis, the same would add up charges on such balance very quickly and the charges could be as high as 24% to 30% per annum. Yes you read it correct 24% - 30% per annum.

I have friends who uses credit card, but never pay the due amount in full, for the simple reason they do not keep a track of the credit card statement and pay the dues as and when available. I would say, this should not be the case. For credit card the cycle does not change with the use of your card.

Let see an example here:

Suppose your credit cycle is from 1^st of every month to last 30^th/31^{st (}last day) of every month. Now you make a purchase on 1^st day of the month worth say Rs.10,000. The due date for the payment of the above amount will be last day of that month which may be 30^th or 31^st. Now, in the same month you again make a purchase on 10^th worth say Rs.20,000. In this case also the due date for the payment will be last day of that month, which is 30^th or 31^st. People here make a mistake and pay the amount after 30 days, and thereby land up paying interest on Rs.20,000 for extra 10 days.

2. Use online mode for making payment towards your credit card: Always use a credit card of bank were you also have a saving/current or any other account and were you have access to internet banking. This make ease of payment, as you can always link you account to your credit card and can make payments easily and frequently by just logging into your account. No need of dropping your cheque to the bank’s cheque drop box every time you receive your card statement. Just to add, I would also recommend to add payment reminders to your account.

3. Tracking of your statement is a must: With increasing use of credit, not to forget has given fuel to increasing crimes/abuse of credit cards. As always know that it’s better to be save rather than to be sorry, you must and must always keep a check and track on your credit card statement.

4. Avoid using your credit card for cash withdrawal: Cash withdrawals attracts higher rate of interest as compared to the normal rate of interest charged on your credit card if you exceed the due date. Since, it is very easy and convenient to withdraw cash through your credit card, frequent withdrawals may lead to complication in tracking the payments. I would recommend not use it (unless necessary) as the same would only add up to your cost of using the funds.

Happy Purchasing!!!