Post Mortem

Credit card blues

By Nagaland Post | Publish Date: 10/9/2019 11:44:30 AM IST

 Here are some smart tips while using your credit cards. Reema the younger one, wants a new puppy. Seema wants the latest smartphone. Wife Mayuri, wants to paint the house and if the budget permits, maybe some new curtains. Thank God this year a vacation is not on the cards, as Seema’s board exams are fast approaching. Papa Pradipta is in a dilemma. He has recently changed his job and is yet to settle down. But no excuses will be accepted. This is Puja and everyone waits for it throughout the year. After all the calculations, Pradipta decides to use his Platinum Credit Card. He has calculated that one of his FDs would mature within a month and with a 45-day credit facility, he would be able to repay the entire amount without paying any interest on his credit card spendings. But is it that easy? If so, why do we see so many complaints and disputes when it comes to credit cards? So, here I am, bringing you some tips on how to use your credit cards smartly: 

Since it is mandatory to pay only five per cent of your outstanding amount every month, I see many people doing just that. And that is exactly what you should avoid doing. If you keep paying only the minimum amount, every month, and keep using your credit card, your interest amount will soon go beyond control. This is the debt-trap you should avoid at any cost. Any roll-over beyond the credit-free days will attract an interest of three to four per cent every month. Try settling every due within 45 days for an interest-free credit experience. 

Most of the time the interest-free credit limit of 45 days is only available when there are no outstanding dues on your credit card. If you roll over a tiny portion of your credit beyond the interest-free period, any new use in the next billing cycle will fail to get the interest-free credit on your new purchase. This particular clause is often missed by users and is a matter of future disputes very often. 

You should never use your credit beyond 50 per cent of your credit limit. This will hamper your credit score and will hinder your future credit worthiness across all lending establishments. This is possible, because banks share your credit history across its network and a minor dispute in your credit cards might affect you several years later, when you’re applying for a home or a car loan. 

Never ever use credit cards for cash withdrawal from an ATM. Any ATM cash withdrawal will attract a hefty fee with interest of three to four per cent from the very first day. The interest-free credit period of 45 days is not applicable on cash withdrawals through credit cards. 

If for some reason you can’t pay the outstanding amount, ask the bank to convert it to monthly EMIs. This conversion will come with a processing fee, but will be a much better option in the interest payout, compared to a credit card interest. 

The best option is to give your bank a standing instruction of full auto debit of your outstanding amount every month. This will save the hassle of paying the dues and in some occasion missing the dates and disputes in the future. 

Keep an eagle eye on the monthly statements and raise; report any discrepancy without delay. 

If used smartly, a credit card is a great tool to upgrade your credit worthiness and if misused, a dangerous tool to kill all credit opportunities in the future. 

Dipankar Jakharia

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