How to Manage Credit Cards Efficiently?

Managing Your Credit Cards

 

1. Read TOS

 

The first step to managing your credit cards is to understand the terms of service or terms of usage. There are very few people who actually read them but I always read them. Remember these terms are not the ones that your sales person tells you but these terms are in the booklet that you get along with your new credit card. Ideally you should know them before applying for a credit card. You can read about the terms for your card you are applying online. It makes me aware of the minimum amount I need to spend on each of those credit cards each year to make them free for me and I don’t need to pay anything for using those cards.

 

So the first point of having a credit card is to use it because there are very few credit cards that offer you completely free card even if you don’t use it. SBI card is an exception and they don’t charge anything even if you just have the card and don’t use it for years but that is one of such cards. All other credit card may charge you yearly fees for non-usage. My Citibank credit card offers me cash back but they also need that I use my card for at least 20,000 Rs per year to make fees waived off.

 

2. Automate Payments

 

Always make an ECS payment from your bank account for each of your credit card. I always do 100% payment to be debited from my bank account. I never want to be found guilty of not making a payment even if I am not around my computers for few days to make the payment but if you don’t prefer 100% payment, make sure you opt for minimum payment due to be debited from your bank account.

 

It does not make any sense to be using your credit card for minor loan or making a due rollover to next month because the interest rate on credit cards is very high. This is the only reason I recommend you to have 100% payment as ECS from your bank account to your credit card. Use other means of loan if you actually need it. Even a personal loan is better than loan on a credit card.

 

Apart from that never ever use your credit card for cash withdrawal because that has even higher interest rate. Just remember never purchase anything from your credit card that you think you cannot pay by the due date.

 

3. Don’t be Afraid

 

I have seen lots of Indians are afraid when it comes to using a credit card. I am not talking about people who are 50+ because they are not used to using cards anyway but even computer geek’s or even an MBA from reputable colleges are afraid of having a credit card. They are even terrified when using it online.

[Source: http://shabbir.in/manage-credit-cards/]