Make the most of your credit card2 min read . Updated: 19 Apr 2019, 11:01 AM IST
- You need to monitor the total amount that piles up every time you swipe your card and the bill payment due date
- Credit cards have a high interest rate of 24-48% per annum and a delay in bill payment can have a major impact on your money life
Know the basics
Are you one of those who stay away from credit card due to the fear of overspending? Credit cards are usually perceived as a financial instrument which is extremely bad for you. The high interest rate which is usually in the range of 24-48% per annum and the assumption of easy access to money can have a major impact on your money life. However, if you are disciplined and use it prudently, a credit card can turn into a good financial tool. Most people stay away from credit cards either due to the fear of overspending or the inability to understand how to use credit cards effectively. If you are new to credit cards or are worried, you will end up spending more. The first step is to keep a track of your expenditure.
Monitor the expense
You need to monitor the total amount that piles up every time you swipe your card and the bill payment due date. For instance, if your due date is 10th of every month, you should remember it. Also if you have bought a pair of shoes, paid restaurant bills or purchased goods, do keep a tab of the final credit card bill amount. Once you know the bill amount and the due date, ensure you pay the bill before the due date. If you are a spendthrift, always remind yourself that you will have to pay the amount in full at a later date. Remember it is not free money. You need to have sufficient balance in your bank account to pay off the amount. The interest levied on the credit card spends after due take is exorbitant.
Easy on your investment
Say you have a monthly expense of ₹20,000 which includes cost of eating out, utility bills and shopping. If all this expense is paid through your credit card, you can invest the ₹20,000 which you have in your bank account. Assuming that you have a regular monthly income, you can pay ahead of the due date. This way money that was lying in the bank account or which would have otherwise gone to the retailer is actually going into your investment kitty couple of weeks in advance. Here you are just using the bank’s money for a certain duration during which your money works harder. However, here ensure to pay on time or else you will have to work even harder to repay.