Use That Credit Card Smartly

Modern day life has made it impossible for man to live without borrowing. With the number of attractive goods and services available, people usually end up using credit cards to satisfy their wants and desires without thinking about the need of the article and run into debts. Since a credit card is a necessary evil in today’s world here are ways to use it to your advantage.

Compulsive debt accumulation

Credit cards allow a user to avail goods and services immediately thinking that they will be able to pay them later. This act of compulsive buying can lead one to build a hole in ones pocket leading to bankruptcy and rendering his/her credit history in poor light. People usually find themselves overspending when their credit cards have higher spending limits. This adds to their liabilities as they end up paying only the minimum required balance instead of trying to settle dues in full due to credit crunch. Paying minimum balance does not help in lowering your outstanding.

Credit rating

Banks always perform a credit check before approving a loan for any individual or a corporation. A credit rating of an individual determines his/her credit worthiness and is decided CRISIL. It is a global analytical company which provides ratings, research, and risk and policy advisory services. A poor credit rating means cancellation of the much needed money.

Paying credit debts on time and in full helps one attain good credit ratings. Therefore, a credit card user should always pay his card bills on time and more importantly should use the credit card only in time of need.

The use of too many credit cards is not a good idea either because this often tempts the user to treat cards as easy money. The money being used is after all credit money and has to be eventually paid back along with interests, which are usually high.

EMIs and credit ratings

It is important to pay EMIs regularly because non-payment of EMIs dent the credit rating and thereby a person’s creditworthiness.

Remember that a credit card does not increase one’s purchasing power, in fact it simply advances future purchasing power to the present, providing a false impression that purchasing power has gone up. So think carefully if you really need a certain commodity before you swipe the card next time.

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