Did you get a call from a credit card provider saying that you are eligible to get a lifetime free credit card? If this is your first credit card, then I am sure you will be highly excited to get your credit card as early as possible. I have already shared an article on things to know when applying for a credit card in India. In this article, I will try to share few useful first time credit card user tips. These tips will help you to make your life easy while shopping.
First Time Credit Card User Tips
There is no hard and fast rule for how to use a credit card. The only formula is to spend as per your repaying capacity and in this case only many people got trapped. Anyway, you should know your credit card & credit card providing bank & their terms & services before using any credit card. In fact you should know about them before applying a credit card only.
Interest Rates: You must know that, credit card interest rates are completely different. It is almost around 3% monthly. Many people did not get or care about the term monthly. In case of any investment scheme or fixed deposit scheme, the interest rates were mentioned as 8% and that for 1 year duration. So, on that context for a credit card, you will be charged 3X12 = 36% interest on your due payment. This is a very high amount and be aware about that while spending money.
Interest Free period: Every credit card has an interest free period of approx 50 days. That means if you purchase something today, you will get a chance to repay that money within 50 days of purchase. But that doesn’t mean that this rule is so simple, this will completely depend up on your bill generation date.
Late payment fee: The penalty for late payment is huge in case you miss the due date of payment. If you can plan your purchase then you can easily enjoy a 50 days free period and the pay your credit card bill. Missing the bill payment due date every time will increase your interest burden as well as apply late payment fees + tax every time.
Cash withdrawal limit: Now a days, you can even use your credit card as a ATM card and withdraw cash from ATM. But be careful to use this feature, as this is a kind of personal loan only and the interest rate applied on your withdrawal balance is very high. Another thing is, you should know that your credit card credit limit is different and cash withdrawal limit is different. Generally you will be having a less cash withdrawal limit.
Easy payment facility: Every bank or credit card provider allow their customer to pay via various methods. Try to discover the ways of payment or what are the payment options providing them and choose the best one. I believe, if you are aware about expenditure habit and always spend as per your repayment capacity only, then you should choose ECS or auto debit option as this will make sure you never miss a payment due date.
Know about LifeTime Free Credit card: Almost everyone promote their credit card as lifetime free. But in many cases these are just a promotional tricks mentioning some terms & conditions applied. Make sure you are aware about such things, as most credit cards offer first year annual fee completely free. But there is always a renewal fee applied, which might be waived off based on your certain transaction limit in a year.
Don’t get afraid of applying a credit card in India after reading this. According to me credit card is a best friend on emergency, as you can manage money immediately. In fact it’s a kind of loan taking facility for which you don’t have to apply for a loan every time. Simply use the card to meet your emergency expenditure and then repay as per your convenient time within the due date.