Use Wit Cautions Your Credit Cards.-00-6339

By Author: rafalinares
Total Articles: 4393
Comment this article

Credit cards or plastic cash is now a mutual mode of payment. The introductory conception of credit cards works as - `spend now and pay later! ´ It is important to understand the spending power that your card holds and consequently to employ it intelligently. It's easy to fall into a debt trap if you do not use your card wisely. Here are a couple of points you should keep in mind when you use your credit card.

Expenses involved in keeping and using a credit card.

A credit card company approached Mr. Amit and confident him that he would in truth gain by owning the credit card that the constitution had to offer - status in society, liquidity, ease of payment, low risk of theft, global acceptability, better record keeping - he could have it all!

The one thing that he forgot was to be educated with regards to the different features this card offered, read the agreement and understand the cost of using every of these characteristics. The card offered a grace amount of time or free credit amount of time of 30 days. Thereafter, it charged 3. 5 percent interest on the swell amount due. Mr. Amit was delighted ...
... to get the extra liquidity the credit card offered and expended Rs. 10,000/- on clothes. He could pay the cash back only after 120 days. Now, as well to Rs. 10,000/- that he expended, Mr. Amit was charged interest on Rs. 10,000/-, i. E. Rs. 86/-.

Calculation of Interest amount:

3. 5 * 10,000/100 = Rs. 350 per annum.

Interest paid = 350*90/365 = Rs. 86/-

Were the expenditures on the card worth the extra amount he paid towards the interest or could he just have waited till he in truth had the cash to incur these costs?

Credit cards extend one's current spending power and tempt individuals to get into unnecessary expenditures.

Another strategy that the card offered is that of minimum payments to keep the card active. Mr. Amit had to make a minimum payment of Rs. 1000/- every month. Assume that he expended another Rs. 20,000/- the following month and paid that back too in the fourth month. Whether or not Mr. Amit only made minimum payments on his credit card, he would incur a total interest cost of Rs. 187/- by the fourth month.

Calculation of Interest amount: -

Interest payable in Month 1: NIL

Interest payable in Month 2: 9,000*3. 5/100 = 315 p. A. , i. E. Rs. 26/- per month

Interest payable in Month 3: 28,000*3. 5/100 = 980 p. A. , i. E. Rs 82/- per month

Interest payable in Month 4: 27000* 3. 5/100 = 945 p. A. , i. E. Rs. 79/- per month

Making only minimum payments on credit cards may be dangerous. It's advisable to make full payment on your credit card bill within the free credit amount of time to keep away from interest costs.

Mr. Amit's credit card company likewise charged him Rs. 2500/- in annual fees. This is some other cost that he will undeniably have to incur only for keeping the credit card.

The credit card company charged him 2. 5 percent fuel surcharge. So for the comfortableness of using his credit card at the petrol pump, he was likewise incurring an further and added cost. It appears being negligible - but combined over a amount of time of time, the amount adds up to a substantial expense.

The card likewise had a life-time balance transfer strategy. That means that Mr. Amit could transfer his swell credit balance from another card onto this new card! This was swell news as he could get further and added grace amount of time to make payments on the swell amount, which was an immediate relief for him. Notwithstanding, this likewise came with a charge - 1 percent for introductory 12 months, i. E. 12 percent p. A. , and 2 percent for the remaining amount of time of swell loan, i. E. 24 percent p. A.

There could be other hidden charges that a credit card company may charge like over the limit fees, dealing fees etc. Be conscious of all these charges before using a credit card.

Stringent debt collection techniques

Credit card companies now and again indulge in unethical and unruly debt collection exercises. A lot of companies hire goons or ‘goondas' for collecting swell payments - do not be surprised if you get calls at odd hours, have surprise visitors at office and have to face embarrassment ahead of your guests - debt accumulators will get to you at any time! Things are changing today and companies are discouraged from resorting to such techniques. A lot of, it is still important to remember that defaulters are at the mercy of credit card companies.

About the Author:

http://abogadotenerife.com/GesDeuCo.php. Also visit: http://www.phara-on.net" target="_blank