Going debt-free is very easy nowadays we can use Credit cards. A Credit Card is one of the most widely used financial products today. Nowadays Credit Cards have become an indispensable part of everyone’s life as it has substituted the need for cash because one can pay for almost everything with the swipe of a credit card. But most of us don’t know how they work and that’s why we often fall into traps where we pay heavy interests and never utilize it according to our needs and benefits. Credit Card lets us borrow funds (usually from banks) for a pre-approved limit to pay for our purchases. Through these credit cards like American Express Gold Credit Card, we can use money that is not ours but we will pay later.
How to use a credit card smartly:
The credit card shows a monthly credit card statement which states all transactions done on our credit card during that month which is called the billing cycle. To pay the credit card bill, we generally get a credit-free period of 20 days from the bill/ statement issue date. If we pay our entire credit card outstanding by the payment due date, we do not incur any interest charges or penalties. But if we failed to pay the amount before the due date, then we will be charged high-interest rates that vary from 36% to 42% annually for the whole 50 days period.
4 Tips to make credit card work for you:
1. Pay your credit card bills on time:
If we pay our entire credit card bills before the due date, we do not incur any charges. But if we fail then we get penalized and charged heavily. So, only spend on a credit card, what you think you can pay later on time.
2. Don’t settle for minimum payment:
There is a provision to pay part of our bill if we can’t pay full. To avoid penalties, we must pay our bills on time. But to avoid heavy interest rates, we must also pay the bill in full. don’t pay attention to the minimum dues.
3. Avoid using your card at an ATM:
Credit cards also let us withdraw cash from ATMs. But avoid using this facility because ATM withdrawals attract heavy charges.
4. Avail a loan if Required:
When we pay bills on time, we will have a good credit history and CIBIL Score. This score helps banks decide whether to approve or disapprove of a loan.
Credit Cards are valuable tools for earning rewards, traveling, handling emergencies, or unplanned expenses. Use the cards smartly and do not get caught in the debt trap. It is the only way to get an interest free loan for a maximum of 50 days. It increases our purchasing power. They are globally accepted, we can move around freely without worrying about currency conversions. So, get your credit card now and use it smartly to avail great benefits from it.