Credit cards, or plastic money, are a substitute for money and a convenient option at that. They make life easier, but with a caveat – “Do you use your credit card or does your credit card use you?” Here are some steps which would ensure that you use your credit card rather than the other way around.
Read the Card Holder Agreement
Do not sign on that dotted line unless you read the credit card’s terms and conditions, features and penalties. This would ensure that you do not discover any surprise fees at a later stage.
Use Cash or Debit Cards
Reach for your cash or Debit Card for day-to-day purchases. Using credit cards for regular purchases will increase your dependency on the card and you might end up over borrowing.
Avoid Impulsive Purchases
Do not use your credit card to live beyond your means. It can impact your budget, divert you from your goals and also potentially result in a debt trap for you.
Know Your Payment Due Dates
Keep track of your credit card due dates. Missing the payment due date could cost you interest and most importantly, it may show up as late payments on your Credit Report.
Never Carry a Balance
Credit cards come with high interest rates of 35-40% p.a. If you are making minimum payments, then you would not only end up taking more time to pay off the debt completely, but you may also pay much more than borrowed.
Do Not Use Your Credit Card for Cash Advances
It is the most costly way of getting cash! Cash advances do not allow for a grace period and this could be the first step towards a debt trap.
Here is an easy and quick way to find out if your credit card has been using you. If your answer to any one of these questions is ‘Yes,’ then your credit card is taking control over you.
• Are you cash stretched?
• Are you making minimum payments?
• Are you over dependent on your credit card?
Answer them and find out for yourself!
ABOUT THE AUTHOR
Satish Mehta is the Founder and Director of www.credexpert.in – a credit and debt counselling company that provides end to end customized counselling to individuals by handholding them through their credit life cycle.
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