Credit Cards

Credit Card: Overview

Carrying cash can be cumbersome and a little dangerous at times. Plastic cash, or credit cards to give it its rightful name, are simple, space saving, and let's face it, a lot more cool. Typically, these cards can be swiped at almost any establishment around the globe. You can also withdraw cash on your credit card. Credit cards are fun; but you might do worse that having a credit card best practices list at hand to ensure that you do not abuse your own privileges.

Apnaloan.com could act as your best practices list. Our credit cards section will give you tips on how to use your credit cards wisely, what to do AND what not to do where you credit cards are concerned.

Before using a credit card - either to spend on it or to withdraw cash - it is absolutely essential to be well educated about it. It is seen in many cases - people, after getting a credit card, tend to spend more and get themselves in deep financial trouble. 

The credit that you use isn't yours - it has to be paid back to the lender. As customers develop bad or uncontrollable spending habits on their credit cards, cases are increasingly coming up at banks where customers enter into a settlement agreement. That is, they negotiate paying an amount lower than what is due on their credit cards as they are unable to pay the entire amount. Customers think they have gotten away cheaply in such cases. On the contrary, entering into such settlements can worsen your situation and give rise to more financial problems in future. It is like adding insult to injury.

When you go in for a settlement, banks can and will legally report you as a defaulter - to the extent of the dues foregone by them - at the credit bureau. All details concerning your default stay at the credit bureau for 7 years. In this period, anytime you apply for a home loan,personal loan or a credit card the details of your default will show up during the verification process and it becomes highly unlikely that any lender will lend you credit.

If you are unable to pay your credit card dues at one go, ensure that you always pay at least the minimum due amount, generally 5 % of your outstanding. In the meantime, find a concrete solution. You have various options - you could apply for a loan against property, stocks, insurance policy or jewelry. Or you could take a personal loan and pay off the credit card outstanding. Just remember that the rate of interest for a personal loan is higher than all the other mentioned options.

Whatever you do, under no circumstances should you seek to make temporary gains and ask the bank to forego their legitimate dues. Remember, although the banks may agree to the compromise to enable them to at least recover whatever they can, such settlements could come back to haunt you in the future, when you need credit - such as when planning to buy a house or a car.

With a credit card you can borrow money for nearly two months without having to pay interest on it. If you were to use your cash wisely in that period you could make money during the borrowed period. 

Let us understand credit free period and method to calculate it:

The credit free period could be as long as 50-60 days. Let's take an example to understand better what credit free period is and how we can calculate the credit free period. Just, if you know your billing date and due date through which you can easily know your minimum as well as maximum credit free period. The benefit of knowing your credit free period is, it helps you to know exactly when you have to make your payment or in other words helps you to make most of your credit free period.

Assume that your billing date is 5th of January and your due date is 25th of January. Here, from 6th till 25th is the minimum credit free period that accounts to 20 days. Know if you make any purchase on 6th of January than your due date will not 25th of January it will be 25th of February as the days between 5th and 25th comes under minimum credit free period. So know if you calculate the days from 6th of January to 25 of February it accounts to 50 days. These 50 days is known as the maximum credit free period. 

Why what are you waiting for...

Get yourself credit card empowered, but before doing that you should check for two things, first it should have the maximum grace period and second the interest charges should be low.

Credit card companies do try to get everything sorted out in less than a fortnight, which starts with filling your application form and your signature. 

Whatever anyone may say about credit cards, the fact remains that all of us want to possess them. Today cards have become 'Must Have' in every household. These are witnessed as empowerment tools which lend you great power to splurge or modestly speaking provide you easy access to cash in trying times. 

So don't delay and get the things going!