Disciplinary measures to follow while using credit cards

Credit cards help to handle immediate financial emergencies, while getting access to lucrative reward points and cash back offers. However, there is a great responsibility attached to its usage.

Apr 02, 2017 05:04 IST India Infoline News Service

Credit cards have become the necessity of today’s generation since it helps for easy credit to meet the regular expenses. They also help to handle immediate financial emergencies, while getting access to lucrative reward points and cash back offers. However, there is a great responsibility attached to its usage. People should be well aware of credit card policies before using them.
 
Following are some of the disciplinary measures to follow while using credit cards:
 
To pay credit card bills on time: Many holders of credit cards default on timely payment due to the reasons of carelessness. This would not only penalise the holder with massive late payment fines and interest rate but also reduces the credit score of the holder. The lower credit score can become troublesome for the holders while applying for big home loans or car loans.
 

Try not to use full credit limit: Credit utilisation ratio is the ratio of existing credit outstanding balances and the total credit limit available on the credit card. Generally, the credit utilisation ratio above 40% is considered as the sign of credit hungriness and may reduce the credit score of the holder. Therefore, to get the maximum benefits out of credit cards, the holder can ask the card issuer to increase the credit limit or avail more credit cards.
 
Try not to withdraw cash from credit cards: Many banks charge a cash advance fee for withdrawing cash with credit card. This fee can shoot up, to as high as 2.5% of the withdrawn amount.
 
Do not apply for many credit cards in short time: The holder’s information stays with the credit bureau, every time he applies for a new credit card. If holder applies for more credit cards in short period, then he may be considered as credit hungry and may be blacklisted over the concerns related to debt repayments.
 
Redeem reward points before expiry: Many credit cards come with various lucrative offers and reward points. These reward points can be very beneficial to the card holders. However, the card holders need to go through the reward points' policies of the respective credit cards and track the expiry dates of the same.

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