When it comes to accessing funds on short notice, the credit card makes for a great benefit. This is beneficial, especially in situations where cash is difficult to be carried or used. This card offers the convenience of making payments and managing your cash situation.
Through this banking card, you can easily borrow funds through the lending bank, and repay pay it back as per your convenience. However, credit cards can either become an easy and convenient money tool, or the evil in your wallet which can easily turn into the root of all your money troubles. You need to exercise caution when using the card, so as to prevent it from harming your financial profile. Here is how it can be done:
It is a convenience, not a source of income: Through the credit card, you can easily access funds borrowed from the bank, as long as you stay within the credit card limit. This limit can be anywhere between minimum amounts of Rs. 2000 to a higher amount of Rs. 20,000. With this, you can easily swipe the card for your purchase, without having to fork out cash immediately. It will give you the feeling that you can spend freely, if not endlessly. However, at the end of it all, there will be a credit card bill you will need to pay for, wherein which, you will require the funds to pay for it. To avoid this situation, you must limit your expenditure to a certain limit, or until you can pay it off. This will help you avoid any unnecessary expenditures or even any additional interest rates.
Risks associated with failure to read T&C: The biggest risks associated with credit cards is the failure to understand the terms and conditions that come with the issuing of the card. In reality, this banking card is nothing but a cost-free, short term, which will benefit you so long as you pay the credit card balance on time. If you fail to do so, it will turn into a high-cost debt. To avoid this situation, you will need to take the time to know all the details about the card. This will include, how the interest that is payable is calculated, the conditions where the interest rates will increase and what type of card usage will attract fees. By knowing these facts, it will help you use the card properly.
Avoid pitfalls: You may think that paying off the minimum amount on balance will mean that you are done with your obligations for repayment. However, till the dues are fully cleared, you will need to pay in large amounts. For one, you will be charged a high rate of interest on the outstanding balance, in addition to all the purchases you make in the future till all your dues are cleared. At this point, if the dues are not cleared, you will not have any free credit period anymore, with all purchases being charged with interest immediately.