A credit card is an unsecured loan advanced by a bank or financial institution after ensuring that only those who meet certain parameters are qualified to use the credit card. There are a few MUST DOs that one must know before using a credit card:
- ALWAYS read the terms and conditions BEFORE using the credit card because once you use the credit card it is assumed that you have accepted the same.
- A card is usually issued for two years and the annual fee is waived for the first year. The second year fee is usually charged and if you do not wish to pay this fee, you should cancel the card BEFORE using it in he second year because using it indicates that you are agreeable to paying the second year's subscription.
- "Lifetime free credit cards" is a new trend in the industry and before opting for one you should check with the bank if all annual fees are indeed being waived off.
- ALWAYS try and pay the entire amount outstanding to the extent possible because all unpaid amounts carry a hefty interest and turns out to be very expensive.
- Whenever you make a large purchase on your credit card you will be given an option to pay by EMI. It is recommended that you pay the entire amount at the extent possible and avoid the EMI route as it is prohibitively expensive.
- Borrowing cash on credit card is very expensive and should be avoided.
- Never choose a credit card for its insurance cover but for its core offering.