Credit cards are now used widely and replacing the payments in real currency notes, many of us are using credit card as medium of payment while making online purchases to pay utility bills and buy groceries. Of course credit card is a great tool which gives you the flexibility of just carrying a plastic card instead of currency notes, pay your bills online and track all your purchases and bills at a single place (monthly statement). The debit cards also have the above benefits but the advantage of credit card is that you can pay the dues at a later date which means you can enjoy free credit facility for a certain period.
The advantage of free credit facility and convenience made the credit card so popular. When you are short of money, you can just use the credit card and later you can pay the credit card bill when you have the money. Also, the banks and credit card companies offers rewards or cash back for using credit cards. This sounds like a great deal, it is in deed but there are some drawbacks associated with it, especially when you don't know how to use the responsibly you may do harm to your financial position.
How to use credit card responsibly?
Never buy what you don't need: This is the basic mistake many credit card holders do, we often buy unnecessary things or more than necessary just because we have a card in the hand. We may not buy these things if we need to pay real money and/or if you have to pay immediately. Just remember you will not realize the outflow of money when you use cards instead of real currency notes.
Always pay the bills on or before due date: Yes though you get a free credit it is not a loan. You have to pay the credit card bill on time to avoid late payment charges and Interest. Please note that the interest charged on credit card bill outstanding is very higher than all kinds of loans.So consider a loan with less interest rate if you need longer credit.
0% EMIs are not interest free: Most credit card companies charge processing fee on EMIs to recover the loss on 0% interest. So don't buy things on EMI unless you are really short of money.
We recommend you the Indian Oil Citibank credit card which offers free fuel on your credit card spend and no annual charges if you reach the minimum annual spend requirement which is around Rs.30,000
The advantage of free credit facility and convenience made the credit card so popular. When you are short of money, you can just use the credit card and later you can pay the credit card bill when you have the money. Also, the banks and credit card companies offers rewards or cash back for using credit cards. This sounds like a great deal, it is in deed but there are some drawbacks associated with it, especially when you don't know how to use the responsibly you may do harm to your financial position.
How to use credit card responsibly?
Never buy what you don't need: This is the basic mistake many credit card holders do, we often buy unnecessary things or more than necessary just because we have a card in the hand. We may not buy these things if we need to pay real money and/or if you have to pay immediately. Just remember you will not realize the outflow of money when you use cards instead of real currency notes.
Always pay the bills on or before due date: Yes though you get a free credit it is not a loan. You have to pay the credit card bill on time to avoid late payment charges and Interest. Please note that the interest charged on credit card bill outstanding is very higher than all kinds of loans.So consider a loan with less interest rate if you need longer credit.
0% EMIs are not interest free: Most credit card companies charge processing fee on EMIs to recover the loss on 0% interest. So don't buy things on EMI unless you are really short of money.
We recommend you the Indian Oil Citibank credit card which offers free fuel on your credit card spend and no annual charges if you reach the minimum annual spend requirement which is around Rs.30,000
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