Learn how to avoid mistakes while using credit card

PV Subramanyam subramoney.com

There is nothing right or wrong about using a credit card. I do not use one too much, but it has a role to play in life. You should use a credit card, but know the mistakes that we can commit or do commit…here is a check list.

The list is not in any particular sequence…but here it is!

1. The most important thing about a credit card is timely payment: the day you get the credit card bill set up the payment mechanism. If you are confident of your credit card company, set up an automatic debit. Or just go online and make the full payment. Delays are expensive.

2. Pay the full amount, on time, every time: Credit card companies send you a bill for Rs. 11,340 and in big block letters tell you minimum amount to pay Rs 1134 – which is about 10% of the bill. You need to pay Rs 11,340 – the full amount on or 3 days before the due date. Always.

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3. Do not use the card to the fullest every time: There is no need to use the card to its fullest.

4. Do not use the card for friends especially if you are not sure whether they will pay you, and when they will pay you.

5. If you have 2 cards, carry one around and leave one at home under lock and key…especially if it has a limit of Rs. 5L !!

6. Read the bills – and the charges. BFSI is not exactly the most trusted industry today, is it?

7. do not buy more just to get points. Makes no sense.

8. If you do run up a bigger debit balance than what you can pay, take a personal loan, beg, borrow from parents, spouse, friends and make the balance nil. Interest rates of 42% p.a. are difficult to beat, right?