Don’t Use a Credit Card If You Don’t Know These 3 Things


Credit cards can prove to be of great benefit if used properly and can even turn out to be a reason for your mounting debts wrecking your finances if not used properly. One of the reasons for rising rates of debts includes the increased usage of credit cards as people find it easy to pay their bills using a credit card. You can use your credit card at financial emergencies or also for leisures as per your plan. Both ways it’s you who will have to pay it back later, so choose wisely. 

There are certain things one should know before recklessly leaping to the decision of using a credit card.

Working system of credit cards

First of all, to use anything for your benefit, you need to delve into the core information. Credit cards work as loan providers when you use a credit card to pay your bill. The amount is lent to you by your respective card issuer and is not deducted from your savings. A particular time period is given for the repayment of the amount being used by you after every purchase. If one fails to pay back the amount in the stipulated time, you would have to pay extra charges of the interest accumulated in addition to the base amount. 

Credit card interest rate is known to be higher. There is a limit on the amount you can borrow from credit cards and if one exceeds the limit being set, you would have to pay extra charges. When there’s a delay in the payment, the card issuer deducts credit score, which can negatively influence your future loan transactions. Note that you could land into a pit of debt if you don’t know about the credit card working.

Repayment strategies 

When you use a credit card, try to pay the amount in between the given time period so that you don’t have to worry about the interest. Use the credit card as much as you can repay at the end of the month without any problems. Note every amount you paid with a credit card and keep track of your payments so that you know how much more to use or when to cease using the card. There is no use in piling the amount thinking you would pay it later and in the end realising you would have to take another loan from somewhere else to pay this debt. 

If you want to avoid the extra charges and fees, you can use the credit EMI calculator to schedule the repayment of the purchases on your credit card. If you take the loan using your credit card limit, make sure you plan how you are going to pay it back. For example, either you should know how to save at the end of the day or know how to cut the slack out of your livelihood to save extra pennies. If you are a shopping freak, the most preferable way is to separate your EMI amount before spending the whole amount to cut the extra stress from your head.

Security of personal information

Recent studies have shown that credit cards are a popular way to know about the personal information of the person using it. Many credit card companies have taken actions to stop these frauds. Therefore, it is important to be informed about the steps that might help you in such situations. 

You should not leave the credit card alone where there are more chances of theft and only use your card on reputable websites that encrypt your information. You can also check the credit card statement at least once a month to reduce the chance of fraud. But, if by any means you land into such a situation, do not panic and inform your respective bank about the loss of your card immediately. Ask them to cancel the card so that you do not face any further losses.

It is always better to pay off your debt beforehand as it reduces the financial and psychological losses. Credit card issuers provide the service of a credit EMI calculator to make the calculation of the repayment schedule easier for you. Use the tool to know the amount you need to pay and how long it will take. Furthermore, be cautious while using credit cards. Better to use them safely and wisely than landing into trouble later. 


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