A credit card is a plastic card you can use to get money from a cash machine or to pay for goods or services.
According to the “credit limit”, you are allowed to spend up to the pre-approved amount and can pay back after a certain period of time without paying any interest. This credit limit depends on your circumstances like your income, expenditure, existing debt, etc. When you purchase with your credit card, the amount will be added to your account. This “balance” is considered the total amount you owe. There is no interest fee for the “Interest-free period”, usually this can be 20 to 55 days which varies with the credit card provider. If you don’t pay in this period, the interest will be added to your account. You will get a “billing statement” by the end of the month with all the details of your purchases from the last statement, interest rates, last date of your payment, etc.
Choose the right card for you:
Before applying for a credit card, check and compare all available cards among hundreds, according to your requirement and eligibility. There are different cards available for different purposes like traveling, shopping, entertainment, paying bills, holiday vacations, etc.
Check more: Tips to increase your credit limit
Here’s a checklist of items you need to look at when you pick a credit card:
- Annual Fee: You will charge some amount for using the card throughout the year. This is known as “Annual Fee”. This fee will be added to the due amount that you need to pay. Give your first priority to “NO annual fee credit cards”
- Introductory interest rates: In this scenario, you start paying a low-interest rate or none at all. But, after some time, the rate increases. When you compare cards, check how long the introductory rate lasts and the interest rate at the end of the introductory period. And one point to be noted is not at all the cards come with such introductory offers.
- Cashback: In some cases, you will get rewarded in the form of cashback. It depends on how much you spend.
- Rewards or Loyalty points: These loyalty points are calculated according to the amount you spend with your credit card, and you can purchase goods or avail some services with these loyalty points. Before applying for a credit card, check where and how to use these points or rewards. If you can avail of these rewards at your frequent purchase stores, then it can be beneficial for you.
- Other Charges: Check the other charges on the card in the credit terms and conditions. You are generally charged for exceeding the credit limit, using the card outside the country and for late payments.
Tips to choose your credit card:
Here are some tips to choose & use your credit card in a better way
- Always try to pay your credit card bill on time – Even if it is just the minimum payment, pay your credit card bill on time.
- Each month, pay your bill in full – so you can avoid interest rates on the amount you should pay.
- Understand the terms of the credit card you chose before choosing.
- Check the types of cards & a suitable one for you.
- Check how you can apply for the credit card – by post, on phone, online or at a bank, etc.
- Check the credit terms and conditions once again before you sign.
Finally, many people think a Credit Card can help them to maintain their financial health. Credit Card can be a useful tool when you use it in a proper way. Otherwise, it can become a bigger liability than an asset. You can choose to close your Credit Card anytime if you feel difficulty in Credit Card maintenance or Credit Card debt but you must ensure that it won’t have a negative impact on your credit utilization ratio. Choose the best card for you!