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Thursday, April 9, 2009

Best Ways to Utilise Your Credit Card

Though I don't usually promote the usage of credit cards, I would like to share some information on how we can benefit from it and not fall into its trap. Credit card debts can be killer, especially when the interest rates charged can be up to 18% or more!

When you pick a card, try to pick one that has no annual fee.Free for life.It is also common to see that these companies usually wave the fees if you are a good paymaster, but you have to ask! I found it out through my own experience with Citibank.

Just have one credit card at any one time - for any emergency purpose. Maybe one of your family members are admitted in the hospital and their insurance policy/medical card seems to give problems at that particular time. Or it just happened that you forgot to withdraw cash to make a payment for something that says "DEADLINE TODAY!!!".

Since credit cards nowadays come with promotions of free points and most of them are providing electronic service, sign up for the electronic billing system. The companies usually have promotions in terms of free gifts or free points to promote their internet billing facilities.

Talking about free points, what do you usually redeem them for? Some gadget that will be used for about five times maximum and then lie in the closet, collecting dust? Think about the items that you actually need, rather than what attracts you on the redemption catalogue. A simple guideline would be to choose an item that you would actually pay money to get it. Otherwise, just forget it.

You can also churn money using your credit card if you know what to do and have the right contacts. Credit cards usually offer cash advance with some interest charged. If you can spot an investment avenue that brings you a higher interest, why not use this cash for this purpose? When any friends need a short term loan from you, with some interest, of course, you can lend them the money. But be sure you have all this properly documented as you don't want to suffer from bad debts!

Make prompt payments.Do not delay even a single day. And pay in full, always. Don't make it a habit to make the minimum payment only. When you do that, all of a sudden you will find that you are surrounded by huge debts, thanks to the high interest rates charged.
Don't use your card to make purchases at merchants who charge an additional fee. Automatically the price of the goods become more expensive. Why pay extra when you can get it at some other place at a cheaper price? Or purchase with cash to avoid the additional charges?

When you need to make a big purchase such electronic goods, look out for promotions which allows you to make payment over a 12 month period, with 0% interest fee.This would actually free your cash flow a little, but always remember to pay on time.

1 comment:

Contributing Author said...

I use my credit card for all my charges but pay it off monthly. It does a couple of things for me. I signed up for the reward system so I use mine for travel. It shows I pay my bills on time and that I use my credit which helps my credit score. It also itemizes