Ten Credit Card Precautions You Must Take

A credit card is used to borrow money from the bank for a certain amount of time, and then pay it all back when you receive the statement or bill.  A credit card is precious, and much more so than carrying around money, because it is attached to both your personal and financial information.

I have come across a lot of people who shy away from taking a credit card for they think it is very complicated and you always have to pay a very high interest rate on the same. I will tyr to burst this myth through this article and suggest 10 ways which would help you to use this product wisely.

Precaution 1:  Keep Your Credit Card Private
Never lend your credit card to anyone, including those that you know.  Do not give out the number or the CVV code.  Any other personal information or documents that are linked to your credit card is also dangerous to give out, such as your name, address, and phone number.  This information can easily be used to acquire additional credit cards in your name, if it is not used to steal from your already created card.

Precaution 2:  Keep Personal Records of Transactions
Whenever you use your credit card, be sure to record the data properly and clearly on a computer or paper.  Any mischievous transactions that show up on your statement should be looked into, and will be much easier caught if you have your own personal records.

Precaution 3:  Be Aware of the Minimum Purchase Regulation
Some stores only allow the use of a credit card if the purchase you’re making is higher than a certain amount.  Since these stores are charged a fee for each credit card swiped, they loose money on small consumer credit card purchases.  Make sure that you always have money in addition to your credit card.

Precaution 4:  Know your due date well and interest free credit period
Most of the banks display an interest free period of certain number of days in their marketing material. This can be from 30 days to 60 days. Keep in mind that this interest free period is the maximum allowable period and is not same for all the transactions. Your actual credit free period is from date of transaction to the due date of the bill. You would be charged interest, if the bill amount remains unpaid from due date onwards. So know your billing cycle i.e the time period between bills, which might be 1st-30th of the month or 21st-20th of next month and so on.
Infact, knowing this, you can use card intelligently by making most of the purchases towards the beginning of the billing cycle and enjoy maximum interest free period.

Precaution 5:  Know about your interest rate and calculation methodology
Most of the banks charge hefty interest rates on credit card outstanding. So know at what rate you are being charged interest. In some cases, this is as high as 36-48% per annum, compounded monthly. Be aware of this rate and how interest amount is arrived at. Most of the banks charge you when the due amount is not paid within due date, but the amount is the total outstanding amount in card, irrespective of whether it is due or not. Because of this, you pay interest on any purchases made after the billing cycle and would be due for payment in your next billing cycle.

Precaution 6:  Avoid withdrawing cash from credit card
For the simple reason that you don’t get any interest free period on cash withdrawals. You pay interest on amount withdrawn as cash from credit card from that day onwards at the existing rate of interest on the card.

Precaution 7:  Be aware of various charges associated with the card
This might be annual maintenance charges (which, to my knowledge do not exist on any of the cards now. So if your bank is still charging the same, it is time to get a new card). Apart from this, there might be many other charges such as cash withdrawal charges, charges for depositing cash at branches, charges for specific purchases done and so on. Be aware of these charges before using the card.

Precaution 8:  Be Cautious Online
Online shopping is very popular.  Whenever you purchase items online, first make sure that the website you are visiting is secured and safe.  If you are unsure if the website is safe or not, do not purchase anything from it.

Precaution 9:  Review Your Monthly Credit Card Statement
Review your statements often, and be sure to pay them off regularly to avoid high interest.  Make sure that you receive your bill monthly, and keep track of this.  If you do not receive your bill when you expect it, speak with your credit card provider to make sure that there has been no fraudulent change of address.

Precaution 10:  Immediately Report a Lost Card
If your card is stolen or you realize that you have misplaced it, the smartest choice to make is to report it and get the card cancelled immediately.  This reassures that no one will be able to use your card if they find it or have stolen it.
CONCLUDING this, remember, credit card is just a tool through which you advance your purchases which you would have made a month later. It is you who ultimately pays for the purchases. So last, but the most important, KNOW YOUR SPENDING LIMITS and spend accordingly.

Bio: Maria Rainier is a freelance writer and blogger for First in Education where she’s recently written about sales management careers along with a piece on natural science careers. In her spare time, she enjoys yoga, traveling, and working with origami.

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One Response to “Ten Credit Card Precautions You Must Take”

  1. [...] article can act as a helping hand for such people. Solution to the Problem Refer to the article on Ten Credit Card Precautions You Must Take. Other than taking the prescribed precautions, one should keep in mind the below mentioned points. [...]

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