5 ways to effectively manage credit cards

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The Fancy World of Credit Cards

• Credit cards boost the credit score of the user if

used wisely.

• Likewise any mismanagement on part of the card

user will hamper their credit worthiness.

• The way one uses it affects the future of their

personal finances.

• Credit card users should take time to understand

how the card issuers and the credit bureaus view

how one uses or not uses a credit card. Outlined

are 5 areas that a cardholder should use to

manage one’s credit wisely:-

1. Read the fine Script • After 2008 financial grid collapse banks

and credit card issuers are trying to reduce their high risk

exposure.

• As a result, higher fees is charged for any usage above the

credit limit and delayed payments after due date.

• The change in the charges or fee structure is usually reported

but in a tiny script which is easy to miss. Avoid being charged

extra by using the internet to periodically micromanage one’s

account by registering for online statements. Scan them for

any changes in the charges and rates. If there is an

overcharge call the card services and talk to them about it.

Negotiating with them and citing previous payment history

and longevity of customer relationship helps at times to waive

the charges.

2. Understand balance Transfers • Card issuers will always find ways to attract customers.

One of the popular methods is through zero percent balance transfer.

• However, this is a promotional offer and the 0% interest is limited to offer period which is usually six months.

• After the six months the balanced amount attracts same interest as the regular outstanding balance. If the interest on the new card is higher, then transferred balance will attract more interest if not paid within the interest free period.

• Besides, any usage beyond thirty percent of a person’s total available credit will affect their credit score. It is ideal to transfer balance on to a card which has no previous outstanding balance and pay it off within six months. In this manner a lot of money in form of charges and interest can be saved.

3. Use the interest free dates • Cardholders can utilize the interest free period to use their

credit to their advantage.

• They have time to receive their statement and make full payment without attracting any interest. This period is usually 51 days of interest free credit starting from the statement date to the due date.

• For example if a statement is generated on 1st January then the due date will be 20th February. There is a misconception that all the purchases attract 51 days of interest free credit. This is not the case for purchases made during the middle of statement period.

• In the same example, any usage made on 15th January will get only 36 days of interest free credit. So check for the important dates on your statement and keep a tab on all payments.

4. Negotiate for Better Rates

• If a cardholder has been a loyal

and good customer, chances of negotiating for a

competitive rate works.

• Banks and card issuers tend to pass such brownie points to

retain good customers. Take advantage of being a good

customer.

• Credit card companies also offer reward points as freebies

and promotional offers. Make use of such rewards to

reduce the amount paid in terms of charges.

• A little saving on the cost of funding ones expenses is as

good expense management practice.

5. Apply for a useful Credit Card

• Every time one applies for a credit card the credit

score is checked.

• While maintaining two or three cards is relatively

good for the credit score as it registers our payment

history into account, too many can signal trouble.

• Future lenders can be wary of people who maintain

too many cards. So don’t apply for a credit card

unless required.

THANK YOU!!

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5 ways to effectively manage credit cards

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