10 Things to Know About Credit Cards

by on August 20, 2010

Credit cards play an important role for us. But it is very important to use them in a wise manner to avoid falling into a debt trap. If you want to use a credit card in a proper manner, you need to take care of the following things. The ten most important things to remember about credit cards are:

They are not a substitute for cash: You must remember that credit is not a substitute for cash. Whatever you spend by using a credit card will have to be repaid with interest, thereby making one extremely cautious of using the credit card in an astute manner.

It is not free money: You must understand that the money you are using on credit is not free money. You will have to repay the amount with interest and many people are under this false impression that it is free money. This leads to mounting debts with vicious credit card statements.

Good Credit is Essential: It is very important to have good credit as it can ensure that you can get a credit card at a lower rate of interest. In case you have bad credit, it is better to first improve your credit and then start using a credit card.

There is no perfect credit card: There are different types of credit cards in the market and it is important to understand them properly before signing for one. You need to first understand your requirements properly before taking a credit card.

You Can Choose Your Billing Cycle: If you feel that you will be more comfortable paying your credit card bills on a specific date, you can fix your billing cycle according to that date, so as to ensure prompt payments to the credit card company.

Reading the fine print: Before signing for a credit card, it is very important to read the most important terms and conditions. If you do not read them properly, you may get a rude shock when your credit card statement is received.

You Can Get Lower Interest Rate: It is essential to remember that you can get a lower rate of interest if you bargain with your credit card company. If you have good credit, you can easily get a credit card at lower rate of interest.

Check Your Statements: You always need to check your card statements carefully. If you feel that any charges are unreasonable you should have a word with your card company immediately. Remember that you are paying with your hard earned money.

Getting Cash on Your Card: You must remember that taking cash on your card is very pricey and it will cost you dearly. Unless it is an emergency, try to avoid taking cash on your credit card as the charged interest are too high.

Having Multiple Credit Cards: If you have multiple credit cards, the chances of missing a payment increase significantly. So it is important not to have too many credit cards and they can also have a bad impact on your credit score.

By ensuring all the above points, and making use of the credit card diligently, your most dreaded liability can become your most valued asset.

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