Avoid using credit cards unnecessarily

Be careful not just with your payments, but particularly with in your payments by credit cards.

Life just appears to be getting smooth and simpler by each passing day. Thanks to the ease provided by modern-day living aids like plastic money, online shopping, e-payments, deferred payments and similar things.

But is it really that convenient as it seems or is it a trap that you are falling into?

In general, credit cards would for the moment increase ones buying power, trapping one to give into temptations and splurge money that you actually don’t have in your account. But in case you fail to pay on time, then the charges would keep on piling on and one will have to tackle with mounting bills for deferred payments.

Here are some methods for curtailing the use of credit cards-

1) Carry some cash in wallet or pay 38 percent rate of interest

It is better to keep some cash handy as withdrawing through credit card from an ATM is subject to interest approximately 2.85 percent compound interest every month. The time starts from the day of withdrawal and effective annual rate of interest would total to roughly 38 percent. In addition, a transaction fee of 2.5 percent is charged on the sum withdrawn. I suggest it’s much easier to carry cash than paying a huge sum of money in interests.

2) Swipe the card only when you are sure of paying back on time

Banks usually propose an interest-free phase of 20-50 days to credit card holders. Avoid using your card if you are not sure of paying back the amount within the given period. Credit card non-payments are not just levied a late payment fee but also draw an interest of up to 3 percent on the exceptional amount from the date of transaction.

The complete purpose behind credit cards is the way they are turned into as most beneficial, so that we fall into debt trap and stay there forever.

3) Avoid overshooting your credit limit

Never touch your credit card if your expenses are by now close to the credit limit set by the bank. Some banks allow jumping the original credit limit, but at an added charge on the overspent amount.

4) Turn your face when you see discounts and sales in stores

If you are an obsessive shopaholic, always deliberately forget your credit cards at home when going for a round of window shopping with friends. Return home, carefully check your wardrobes and make a list of what you really need to buy and what not. On the second round of shopping, take your cards along and avoid the temptation to splurge.

5) Reward points may not turn out to be productive

Shop only when required, and not merely for gaining 1,000 reward points on the first swipe.

6) Utilise money cards or travellers cheques when flying overseas

It is safe and intelligent to take along the travellers’ cheques or money cards for which you have paid in the local currency. Negotiations by international credit card are payable at the rate of exchange existing on the date of buying and in addition draw a charge of 3 percent on the total.

Drawing amount from ATM through international credit cards is charged with enormous transaction cost and service charges. And the thumb rule is, aim to limit your expenses through credit card to 40 percent of the credit limit.

7) Is online transaction safe?

Ensure the authenticity and safety of the website before using your credit card for online transactions. Websites with ‘VeriSign’ and web addresses starting with ‘https’ are safe and protected in comparison to the web address beginning with http. It is simple for hackers to decode passwords and credit card details. So, never use new or unfamiliar websites for online transactions.

So, be careful not just with your payments, but particularly with in your payments by credit cards.

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