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ARE YOUR CREDIT CARD INJURIOUS FOR YOU?

Updated: Jan 16, 2022

Your Credit Card is Injurious For You? Question With This Yourself, and if Your answer is yes then surely this article for you.


(हिंदी मे पढ़ने के लिए यहाँ क्लिक करें )


What is Credit Card?


Credit card is a unsecured loan provided by bank for a certain span of time like as 30 days or 45 days on without interest. If Credit Card Bill is not Paid as Per Guideline than Bank Charge 36% to 45% Interest per annum on your Bill from 1st Day of Bill. If you not Fulfill the Bill Forgot 45 Days Relaxation, Now this Interest Period Started from 1 day of your bill.


Let’s See This Example-


" Ramesh is a Credit card User, He use this as Per his requirement , He Have XYZ bank credit Card Whose Limit 1 Lakh Inr. Now He Spend 25000 Inr on Shopping on 1 January.

On February 1st if He Successfully Paid his 25000 Bill, He will not pay any interest on this.

Now This Totally Fine, But Now Many People Ask if Ramesh Not Paid his bill than what will happen?


If Ramesh Not Paid His Bill He Have Two Option-

1 )- Pay Minimum amount like as 1000 INR 2)- Pay Next Month.

Both Scenario is Injurious for Ramesh- But Why?


Case 1- if Ramesh Pay Minimum Amount , For Example 1000 INR-


Than next Bill adjust This Amount, Means His Next Bill Amounts is

(25000-1000)+interest (as Per Bank Guideline) Keep in Mind This Interest is Calculated from 1ST Day of Transaction. And This harm Ramesh Credibility as well.


Case 2- If Ramesh Not Pay Credit Card Bill-


This Affect Ramesh’s Credit Score (Cibil score), Mean Ramesh Cannot Get Bank Loan in Future at Affordable interest Rates. And also Ramesh will Accumulating the interest of Credit Card Bill Time to Time if He Never Settle this amount, after a certain time a Recovery agent will come to house address. How Ramesh Deal with Recovery Agent? Thought this full scenario with yourself. How Terrible this? "


WHAT IS CIBIL SCORE?


Cibil score is a tool to measure your credibility to repay the Loan amount to bank in given span of time, if you Pay Fast Your Cibil Increases , if you not pay bill on time your Cibil is down, A Healthy Cibil Between in 700-900. You Can Increase your Cibil by Visiting this Article. Also You Can Check Your Cibil Score Regularly. Just Read Full if You want a tool to measure your financial health.


Some Credit Card Myths And Tips To Improve Efficiency of Credit Card-


Credit Card is a Very Beneficial Thing , You can Earn Rewards for Food, Shopping and also Free movie Tickets, But If you Do not use this Properly, Than This is become a headache. So Use It Right way. Person Who use Credit Card have many myths ,Read this Full article to avoid these myths.

TOP CREDIT CARDS MYTHS

1) Use Credit Card Limit free for 45 to 50 Days-


This Is Not fully True,Actually Fact is credit card offers free credit till the end of the 30-day billing cycle and the payment is due in about three weeks. So, if the purchase is made on the first day of the billing cycle, you get an interest-free period of almost 50 days. But this interest-free window gets smaller with every passing day. Purchases made 15 days into the billing cycle will get only 35 days of free credit. On the last day of the cycle, the user will get only 20 days of interest free credit. Keep in mind that there is no free credit if you rolled over the balance in the previous month.


Note- Use More than 1 card So but different billing cycle helps you Juggle expenses and Maximize the interest free Benefit.


2) Credit Cards Makes You Shopholic-


Credit card makes you shopaholic , this is a totally myth. This depend on you how you treat this, if your income is not much and you use this for shopping and other service , than this is not beneficial, Your expense more but your income is fixed , so you may stuck in trap of Interest of credit cards. Use credit card Wisely and try to to pay full amount of your credit card.


DEBT TRAP

Note-Use Budgeting app to Understand you expenses. these app remind you if you overshoot your budget.


3) More Use of credit cards can grow your credit card reward point.-


Credit Cards Rewards Depends on Nature of Expenses , Where you use it, How to use it. Too much Use of credit card only for earn reward points is Totally Fool thing. So Don't Use Blindly Only for earn rewards, this will be Danger for your budget . Also, don’t wait too long to accumulate a huge number of reward points. Reward points are like cash and lose value over time. In many cards, reward points even lapse if not used within a specified period.


Note-Encash reward points periodically. If the credit card company allows, adjust the points against your bill payments.


4) If you Use more cards than this Effect you Cibil Score.-


Cibil Score is Based on your Paying History of your EMI and Credit cards Bill. Use of more cards is not Effect your Cibil if you Pay this on time. Also this Increase your cibil if you Pay all your credit card bill on time. and Credit Card Companies approach you for use their credit Cards.


5) Only Use Free Credit Card, and Don't Use Membership Credit Cards-


Why should anyone pay an annual fee when credit cards are available free? The answer lies in the benefits they offer. A free card may not give you access to an airport lounge or make you eligible for airmiles. Others won’t give any discounts at restaurants and merchant outlets. The benefits accruing from these cards far outweigh the annual fee. What’s more, many cards even waive the fee if the usage exceeds a threshold.


Note- Use Credit Card who suit your Life Style.


6) Avoid Credit Limit Hikes if you Don's Need Them-


Timely payments and responsible financial behavior are awarded with higher credit limits and aspirational metallic colors on the card. There is no reason for you to deny yourself the benefits of higher spending power while having the added advantage of lowering your debt in comparison to your total credit line.


Benefits of Credit Card-

  • It Help you to Build your Cibil Score, A Healthy Cibil Score Always Help to getting Loans at Lower Interest Rates, Such as Home Loan, Car Loan, Business Loan Etc.

  • You Can also Do Short Term Investment as you know Next Bill Due after 30 Days. If you Don’t Know How to Invest First Learn Investing, otherwise Ignore this.

  • Rewards By Credit Card NBFC or Banks. Such as 4 Credit Card Point is Approx. 1 INR, Means If you have 10000 Points than you have 2500 INR as Reward Given By Credit Card Company. If You Don’t Know How to Claim your Reward than Comment, Our Team Surely Help you How to claim rewards of CC.

  • Credit Card Accepted Globally. Means If You Travel in US, UK etc. than Don’t worry if you carry a credit card. Debit Card Has Some Limitations but Credit Card fulfill all Limitations.

  • In Emergency you can Use this as urgent cash Requirement Tool. Only use Swipe, Remember Never Withdraw Credit Card Cash From Bank ATM. Why? Read Full Below.


Withdrawing cash on Credit Card: Dos and don’t-

At the end of the month, a Credit Card cash advance may be your best bet for some extra cash. The best part: instant funds without the hassle of submitting documentation and waiting for approval from the bank. The amount you can withdraw depends on the cash limit assigned by the card issuer which is a percentage of the card’s total credit limit.

However, this feature comes with specific terms and conditions that one must be aware of. Here’s a list of factors to consider when withdrawing cash through Credit Cards.

Charges While it is understood that Credit Cards come with interest and fees, withdrawing cash on Credit Cards can prove to be a costly deal. Here are charges these loans attract:

Cash advance fee:

This is the fee charged every time you withdraw cash using your Credit Card. Typically, it ranges from 2.5% to 3% of the transaction amount, subject to a minimum amount of Rs 250 to Rs 500 and is reflected in the billing statement.


Finance charges:

Regular Credit Card transactions attract finance charges and so do cash withdrawals. The charge is levied from the date of the transaction up until the repayment has been done.


Interest: Interest is charged on a monthly percentage rate, typically from 2.5% to 3.5% per month. Unlike regular transaction, for cash withdrawals, there’s no interest-free period; charges start accruing from the day of the transaction till it’s paid in full.