Credit Cards are fun. They are incredibly convenient to use too. You can buy whatever you want without worrying about making immediate payment. Invariably, you end up buying unnecessary things you cannot afford. Use them carefully, and you find them to be your best friend. At the same time, they can prove to be your worst enemy if you use your Credit Cards irresponsibly. Here are some dos and don’ts for the first-time Credit Card users.
1. Choose the right type of card
Credit Cards are of various types. Choose the one that supports your needs and spending habits. A standard card should suffice if you use it for making general purchases. If you are a compulsive online purchaser on online retail stores, you should opt for a card that gives you cashback and discount offers. Frequent travelers can choose for Credit Cards that provide them with air miles points as rewards and so on. It is better to Compare and Apply for Credit Cards Online if you are looking for convenience and better options.
2. Buy things only that you can afford
A Credit Card is very tempting to use. Maintain a strict budget as you can end up with buying things you cannot afford. It is hard to resist using a Credit Card. One should develop the discipline and self-control while using cards. Remember, nothing comes free in the world. You have to pay for the purchases you make.
3. Pay your bills on time
Your budget comes handy here as well. If you buy things that you can afford, you can pay your bills on time. Ensure to pay your card bill in full. You save a lot of money by way of interest. Credit Card companies encourage you to pay the minimum amount due every month. It is a facility, but you should opt to pay your bills in full every month. Delay in your payment results in levying of late payment charges. It affects your credit score as well.
4. Paying minimum amount due every month is a dangerous proposition
Credit Card companies offer facilities whereby you can pay a minimum amount due and keep the card alive. The minimum amount due is about 5% of the total outstanding balance. Remember that payment of the minimum amount results in the banks levying interest on the unpaid balances. The rate of interest can be as high as 36% to 39% per annum. Payment of the minimum amount due every month takes more than 50 months for the liquidation of the entire balance. It will take a minimum of 50 months to liquidate the card outstanding amount by paying the minimum amount due every month, provided you do not make any new purchases on your card.
5. Check your Credit Card statement every month
Today, Credit Card companies send SMS confirmation messages every time you use your card. Nevertheless, you should check your credit card statement for inaccuracies. There are chances of identity thefts. Check your accounts regularly and dispute the purchases you have not made. Do not ignore the small amounts as identity thieves try out small payments before trying out something big on the cards.
6. Be aware of Credit Card fees
Check out the fees of the banks before you make a Credit Card application. Banks and Credit Card companies levy different kinds of charges such as issuance fees, late payment fees, annual renewal charges, fees for providing duplicate statements, and so on. Being aware of these fees is advisable.
7. Feel free to ask for concessions
Banks have a habit of levying various charges on your cards. You should not be afraid to ask for concessions. Statistics show that more than 87% of people asking for a waiver of late payment fee were successful. You can also ask for a benefit in the rates of interest and a higher limit as well, if necessary. Banks offer such facilities to stay afloat in the intense competition.
8. Check out your credit score
A credit score in the range of 750 and above gets you instant approval for Credit Cards. Maintaining the rating is crucial. Repaying your card dues in full every month is one way of doing it. You should call for your credit report and check the same for inaccuracies. Dispute them immediately and seek rectification. A robust credit history enables you to apply for other credit facilities like Home Loan, car loans, and Personal Loans.
These 8 tips should prove handy for first-time Credit Card users. Use your cards wisely. They can be the best friends you will ever have.
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