Credit card has become a major financial tool across the world. More and more people are having credit cards. There are many people, who have more than one card issued on their name. Although credit cards are gaining popularity among the Indian customers, generally, people hardly bother to understand the terms and conditions related to the card. Most of the people who opt for a credit card make an impulsive decision of owning it. At times people get ready to opt for the credit card because the bank is offering it for free. Some people choose a specific card because their friends, family members or colleagues are owning the card from same bank. Is it the right reason to own a card? Do you think that you have chosen the right kind for card on the basis of your spending habits? Have you taken the decision in influence?
More and more people are using credit card for purchasing things or making bill payments. But most of them must be not aware of the terms and conditions related to their card. Most of us get a sinking feeling at the time of making credit card payments. People complained about higher charges, additional charges, wrong billing, extra amount charged on billing, higher late fee charges. People just overlook at the terms and conditions and believe on the half-baked information provided by the bank executive while opting for the card. This make the condition worse for those who end up paying extra amount as late fee or interest on the outstanding amount. Therefore, it is really important that you should not overlook at the terms and conditions related to your card. After all at the end of the month, you are going to make payment. Here are some important things you should know about your credit card.
Getting too many: Do you have more than more card? Do you think that having another card is important for you? Why do you want a new card? These are few things which you should ask before getting a new card. The more cards you have, the higher chances you have of getting in to bad debt. You should never forget that credit card is not the substitute to increase your income or purchasing power. Besides, it should be used with a thought of making repayments of your purchased amount. Having too many credit cards can also land you into trouble in case you are not able to make the payments on time or making minimum payments to keep the flow continue. It will not only impact your credit score, but also turn your CIBIL into negative. Having two to three cards is not much of a problem, but having more than three card with long outstanding history is definitely an issue.
Interest rates: Most of the people give an excuse of owning more than one card is now they can manage their funds more efficiently. They will use fund transfer facility to transfer high rate of interest to lower rates. You should always consider the transfer fee or other charges linked with balance transfer. If you will not be able to make payments of your outstanding amount on time what will be the late fee charges in that bank?
Introductory rates: Most of the credit card companies lure customers to make big purchases with their credit cards and get no-interest on EMIs for initial few months, or no-interest period for 60 days or 90 days or so. But you should keep in mind if you miss free credit period due date, you will pay interest from the day of purchase. This way you will pay interest even for the free days as well on a higher rate with late fee.
Not reading terms and conditions: The tiny print leafs inserted inside your credit card booklet, is a must read documents. But, generally most of the people just overlook that paper or hardly read even few lines of it. You should always invest some time to read terms and conditions of your card. It is really important because that way you will be able to know the interest rate, late fee charges, additional charges and other fee linked with your card. After reading it minutely, you will find how that lower rate of interest will turn into higher rate if you will miss payment due date. How will you end up paying more fee on cash withdrawal? This will give you all insights and detailed information about everything related to your card. Therefore, read all the terms and conditions carefully.
Choosing the wrong card: If you have chosen the card just because of rewards program, this is not the right move. You should choose a card on the basis of your needs, not because it is offering your plenty of rewards. Most of the cards offer different kinds of rewards and benefits to its customers for spending a specific amount. Getting rewards and special rebate on purchase is good things, but if you are paying higher rate of interest on your outstanding amount then using the card to gain rewards is not a smart decision. This is true that rebate and travel points help you to get the best possible discounts on your each purchase if you are paying lower rate of interest.
Always making minimum payments: You are thinking about having a new credit card with the reason to increase your purchasing power and you will maintain that card by making minimum payment all the time. This is not a right decision as you will end up paying higher rate of interest on your outstanding for each card. The new bank will issue the card with a higher rate of interest looking at your past history. Therefore, getting into the trap of using more cards to balance transfer and higher credit limit will increase your financial problems.
Making late payments: You always make late payment because of any of the reason and end up paying late payment fee on your bill. This is not the right way to use your card and make payments. Making late payments will put you into negative credit history and you will pay late fee along with higher rate of interest.
Ignoring your monthly statement: Most of us hardly pay much attention to the details mentioned in our monthly statement. There are people who even don’t bother to open the statement, they just make payment of their billing amount. This is a wrong practice. You should always read your detailed statement before making payment, to understand the levied charges and other charges, which you need not to pay if you use your card smartly.