There is no denying on the fact that when it comes to credit cards, they are a handy way to borrow, if you use them in the right manner. But, once things have started going wrong, you could find that your debts spiral out of control. But, with the help of few tips and tricks, it would be easy for you to limit your expenses by managing your credit card account wisely. So, take a look below to these simple tips and know how you can manage your credit card account.
Keep Your PIN Secure
Don’t store your PIN with your card or don’t give it to anyone else. Well, if you do so, if someone takes your card and uses it, always keep this thing in mind that bank won’t pay you back the stolen amount.
Change your PIN to something that you’ll remember. Yes, always change your pin after some time and change it something that is easy to remember. But, not something as easy as your date of birth that others can easily guess.
Check Your Bill
Yes, you should always check your bills thoroughly and regularly instead of taking it casually. In case, you don’t remember anything, get in touch with the bank for the further clarification.
If you receive your statements online, be organized when you log in to check it. You should do it on a specific day, say a week prior to your due date of payment.
Plan to Pay Off in Full Each Month
If you don’t clear your balance completely, there are changes that your credit card provider will charge interest on everything related to your card. In fact, if you have the credit bill of let;s say Rs. 1000 during the month, and you paid only Rs.900 at the end, you could be charged with the interest on the entire value of Rs. 1000 as you are still Rs. 100 in debt.
When it comes to credit card debts, they can spiral out of control because you pay interest when you don’t clear your credit card every month. Moreover, debts can mount up, and take a long time to pay off.
Avoid the Late Payment Trap
There are times when you don’t pay your bill on time as there could be some serious consequences for that:
Fees and charges
A late payment fee will be charged along with the interest in the entire amount you owe.
Increased interest rates
If you are having a bad credit history, and your profile looks like a defaulter, your card provider may increase your rate or in fact reduce your credit limit also.
Problems getting other credit
Not making the payments on time can actually damage your credit rating, thus it becomes quite tough for you to avail a loan, mortgage, or other cards.
But, don’t worry as there are some useful tips that will help you to avoid paying late.
Pay by Direct Debit
Moreover, one of the best ways to avoid the late payment trap is to avail the facility of auto deduction, wherein the money will automatically deduct from your bank account. Ideally, you should set up a direct debit in order to pay off the entire amount every month.
Pay with time to spare
Even if you prefer to pay your bills on time, in fact on the same day by phone or online, but you should always your bills before as sometimes due to some technical error it takes few days to process your payment. Thus, it’s better not to leave everything to the last minute.
Avoid the Minimum Payment Trap
The minimum amount that you need to repay on your card every month is usually quite small, perhaps a percentage of the balance. Moreover, it’s always at least the interest along with the charges, and at least 1% of the balance. But, it would not be wrong to say that paying just this amount will actually cost you much more in the long run. So, you could be making the repayments for years, hence will end up paying more interest than the actual debt.
You should always remember that if you don’t pay off the entire bill, you also get charged with the interest on everything related to your card, including the new purchases which you have made that month. So, if you keep spending on that card, you will end up paying actually more.
Don’t Go Over Your Limit
Yes, always try to spend within your limits because if you do so, you will be charged with a fee. In that case, you should get in touch with your card provider so as to raise a request to increase your credit limit. But, you should only do this in one condition, if you are sure that you will manage to repay the higher amount, and won’t be tempted to rack up more debt.
Don’t use cash withdrawals or credit card cheques
When it comes to credit cards, they are absolutely not like debit cards that allow you to withdraw the cash for free. In fact, in case of credit card, you need to pay the fees and higher interest than the normal, even if you have paid for your card in full at the end of each month because there is no interest-free period unlike purchases.
Normally, you will pay the same fees and interest as you would when it comes to cash withdrawals to carry out other transactions like:
• Paying for something via credit card cheque (always avoid that)
• Buying the foreign currency
• Buying the postal orders
• Gambling transactions
• Competition entry fees
Avoid recurring payments on your credit card
The recurring payment, commonly known as continuous payment authority actually lets a company to put the charges automatically onto the bill of your credit card. But, it is not as safe as direct debit from the bank account.
Thus, in order to cancel the recurring payment, you need to contact your credit card provider, and should inform them that you withdraw your permission for the company in order to take the payments. If your bank gives the permission to the company to take any payment after that, the money should be refunded to you along with any related charges. But, in that case, you need to let them know no later than actually the end of the previous working day.
It would be great to avoid recurring payments because of the danger that you won’t realize how much is on your bill, and there are chances that you might go over your credit limit accidentally, thus leading towards the charges.
Protecting your Payments
However, if you are worried that something can stop you from making the credit card debt, insurance can help you out. But, you should think carefully before going for it as it is not only expensive, but you might already be covered by another insurance policy. So, be careful here!