5 Important Tips for Credit Card Beginners
It is really thrilling to hold your first credit card in your hand, and the feeling of financial freedom is really great. There are few points to be kept in mind to keep the debt trap away, so swiping it smartly is important. Dialabank lists out some points that can make you a smart credit card user.
Stick to a budget:
The benefit of the credit card may result in a debt trap as you may end up spending more than you can afford. This problem won’t occur if you have cash in your hand as then you will only spend what you have.
So if you have just begun using a credit card then mark a limit of the expenses that should be nearly half of the limit of your credit card and strictly stick to it.
The best way to keep track of your expenses is that subscribe a message alert so that whenever you swipe your card you will get a message alert informing you about the amount you have spent and your remaining balance.
Don’t increase your credit limit:
At the time when you get the card, there is a limit set on your card, and you cannot spend more than that, and that limits on your income. You may increase the limit of your card later. However avoid doing it, at least for one year. When you are totally confident about the usage of your plastic money, then you can apply for increasing the limit.
Make sure once you salary hikes then apply for increment. When your expenses reach the limit of your marked limit, stop carrying your card with you. Try to carry cash with you.
Always pay the full amount on time:
At the end of the month, you receive a bill of credit card also known as a statement, telling you how much you have spent in a month and how much amount you have to pay, and by how much time. Ensure that you pay the entire amount in time or else you will have to pay a late fee.
Don’t try to pay the minimum amount that is due and roll over the balance for next month. This will be the very first debt trap. The due amount will be charged a high-interest rate, typically 1.5-3.5% a month. Another point to be kept in mind is that too many rollovers may black mark your credit score, and a low credit score will make it difficult for you to avail for Loan in the future.
Secure your card:
Don’t tell your credit card information to anybody, especially the CVV code behind the card. Never let anybody use your credit card as you will be responsible for all charges. While shopping makes sure the salesperson doesn’t store your card details anywhere while shopping online make sure it is a trusted website.
Never withdraw cash from your credit card from the bank or ATM, that money will be considered as cash advance, and you will have to pay a high rate of interest on that. The interest rate will accrue immediately until you repay the entire amount.
There will not be any grace period for such expenses; besides you will have to pay nearly 3% of the advances. So go for this route only in an emergency.