Credit Card Management

Priyanka could not contain her excitement when she finally got a Credit card, after much of the complicated verification that she had been put through. Her shiny card with a credit limit of One Lakh was enough to set her on shopping spree. On top of that, the golden word of ‘SALE’ at the Mall just added up to her excitement, to buy her things she can’t, till now.

This happiness was sweet but took no time to fade away as her first credit card bill, on her hands, brought up the real picture of outstanding amount of Rs. 80000. Priyanka was in a fix to recover her from this debt in absence of spare cash or savings. She tried to lighten her debt burden by paying minimum amount due every month while paying a huge interest on the rolled back balance. Let’s evaluate, what Priyanka should have done and should do to be better at credit card management: -

1.  A fixed Budget – Credit card should always be aligned to the Budget which you could afford to pay at the end of the month. Plastic money is not a gateway for buying luxuries which you could not afford otherwise.
2. Eye on Credit limit – even if your banker offers you an increased credit limit, be on alert to not to get lured by these offers. A higher credit limit could always push you for impulsive buying.
3. Full payment a ‘must’- Shake-off the idea to pay credit card dues in bits and pieces. Rolled back outstanding balance is charged at as high interest of 1.5% to 3.5 % per month, you stand to gain nothing by extending the payment. Moreover, too many rollovers could effect on your credit score.
4. A list of No-No – Do not use your plastic money to Booze, to buy food items or at Spa, no one would want to worry for money they had spent on relaxing last week. Finally, do not take the privilege to treat your Credit card like ATM card as you might end up paying a higher interest rate on such advances.
5. Be Secure – Register your number on top priority for two reasons, firstly, you could check on misuse as you get an alert every time your card is swiped and secondly, it will also keep check on your spending.

In today’s life, Credit Cards have become significant part of individual’s spending. A wise management of credit card could actually help build stronger credit rating. It depends whether you are in charge of your credit card or vice versa. It could be a savior at real times of needs but Terms & Conditions apply.