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5 Things You Should Be Watchful About Credit Cards

How Will Benefit From Credit CardCredit card usage has found space in many new wallets in India with the government encouraging the need for digital India. Credit cards are proven to be most protective and convenient way of conducting digital transactions because they come with fraudulent protection.  You are not at the risk of losing the money even if you lose the card. Customer care of the companies of credit card is just a call way to help to block the card in the case of any uncertainties. These credit cards play a key role in increasing the purchasing power of the common man in India. If you are one among the people who are using the credit cards for digital transaction, there is some key information you should know about the credit cards

Know-How for First Time Credit Card Users

How to make credit card payment?

 You might be aware that credit card offers interest-free credit for billing of 50 days. You should pay out the total utilized amount at the end of each billing cycle to keep the credit score intact and reduce your financial debts. Few times, it may not be possible for the user to make the payment in full at the end of the credit cycle and the credit card companies give an option to make a minimum payment which is 5% of the outstanding bill amount. Paying the minimum due may not impact your credit score; there are chances that you will be trapped in the revolving credit because you will be charged an interest rate on the outstanding balance according to agreed terms till the outstanding balance is paid off.

Know about annual charges  

Most the credit card companies announce about the reward points and other benefits offered by them to increase their market share. Annual charges levied by the company on the credit card are hidden most of the times. Companies levy annual charges for utilizing card throughout the year and this will depend on the type of card you have taken. Few companies do waive this fee in the initial days upon spending up to specified limit. Know this key information before avail one.

What is billing cycle?

Credit cards promise to offer a free credit period of 50 days. This free credit period is calculated according to the billing cycle instead of date of purchase. If the purchase is made just before a day of a billing cycle, you will just get an interest free credit of one day rather than 50 days as promised.

Credit utilization ratio impacts credit score 

If you have taken a credit card to establish a credit score, keep in mind that your credit utilization score may impact your credit score. The ratio is calculated between the credit limit available and credit you use every month. You should maintain healthy credit utilization ratio to impact a credit score.

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