To become Rich, Shield you from Credit card Traps. Managing the Credit Cards.

We discussed on what is credit card, credit card benefits and credit card traps in the previous posts. Everyone understands that credit card in unavoidable and in I manndia 5 crore people hold at least one credit card.  Let us use the credit card responsibly and avoid credit card traps. Here we would discuss managing the credit cards, how to handle credit card and manage the credit card debt.

Credit cards are best way to spend, only if you keep track of your payments on time and repay them before the cycle ends.

Credit card provides interest free EMI and it is auto debit from your card based on EMI.  It offers discount and easy to buy costly furnitures. But ensure you pay the payment on time and before the cycle ends. Otherwise interest free EMI money would be charged at 40% p.a interest.

Minimum balance amount just to ensure your credit card is active and it won’t avoid charging HIGHEST interest on remaining amount.

Credit card payments mark the minimum balance in bill cycle based on balance and card limit. But it won’t help to avoid the interest calculated on remaining amount. It is pure trick to make sure you pay less and get into credit card trap. It is first step to the credit card trap. Pay all the remaining amount in the bill cycle. It will protect you from credit card traps.

Do not cheat yourself. Getting 500 Rupees cashback and 1500 rupees late fee for credit card payments.

Most of time credit cards are used for cashback and discount offers. But it is stupidity to get 500 rupees cashback, pay 1500 rupees late fees + 40% p.a interest rate on your spending. Do not do this mistake. Use credit card responsibly and spend only for the required. Do not buy from credit card only for cashback and discounts.

Do not provide credit card information for free trail or trail subscription. Forgetting to cancel the subscription will make huge loss.

Few online services offer free trial services for one month or 90 days. To avail the train offers, it may ask credit card information. But be careful on providing the credit card information for trail services or free subscription. If we miss to unsubscribe or deactivate the trail services, it would start collecting the subscription fees from credit card. Be careful on availing trail services with credit card information.

Credit card payment would affect your CIBIL CREDIT score. Credit score is important to avail housing loan and personal loan.

Credit card payments, late payments, missing payment in the cycle, money spent on credit card, all these have impact in your credit score. Credit score is important to avail housing loan,personal loan or vehicle loan. So pay the credit card payment before cycle ends.

Try to convert it to EMI if you are unable to pay the credit card fully. Credit Card Payment.

Due to emergency spending, the credit card usage increased to huge amount and not able to pay back the money. Every month we have to pay 36% – 42% p.a interest on balance amount. It would make huge loss to us. To manage the scenario better, try to get money from friends to pay the credit card money. The worst case avail personal loan to pay the credit card payment. Because credit card interest in 36% to 42% p.a . But personal loan interest is 14% to 18%.

Read your credit card monthly statements. It would help you to realize your spending and credit card charges.

Credit card insurar issues monthly statements by mail or post. Read the credit card statement and understand how much financial fees charged in that month. It would help you to realize the spending and credit card charges.

Credit card is good or bad for you? Your last one credit card statements would tell you is good or bad.

One group of people recommends credit card and another group of people avoids credit card. You may be confused whether credit card is good or bad for you. It all depends on how you manage the credit card spending and payment. Get your last one year credit card statements and calculate how much money you paid as penalty, financial charges,interest and subscription fees. If you paid more than 6000 rupees in a year, credit card is bad for you. You are not managing properly. Try to avoid using credit card or take responsibility on credit card spending.

Never draw cash from credit card. If you draw Rs.500/- from a HDFC credit card straight away you will be billed AT LEAST 100 rupees as a transaction fee!!

Do not withdraw cash from credit card. It collects transaction fees and other hidden charges. Avoid withdraw money from credit card. Nowadays mobile wallet ( PayTM, MobiKwik,PayUMoney and FreeCharge. ) allows to transfer money from credit card with minimal changes. Better avoid transfer money from credit card and it charges transaction fees.

Do not fear for credit card. It is well instrumented tool to have if you aware of your personal finances and expenses. Credit card would help in emergency. hospitalization or some other form. use it properly. Check the above checklist with your credit card usage and aware of your credit card spending.

Don’t think you are paying just 1000 rupees monthly fees to credit card. 1000 rupees monthly investment in SIP mutual fund will make you crorepati in 35 years.  Don’t pay to credit card companies, invest the financial fees in SIP to become Rich. Happy Spending and Investing.

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