5 effective ways to become richer with your credit card

There is always a myth which spreads around that credit card financially burdens an individual. It’s never seen as a boon rather treated as a bane. I would like to bring in a different perspective to this opinion, as I always treat credit card as a blessing in disguise. The plastic money (credit card) never burdens the individual, rather it’s the individual’s financial mismanagement which disrupts the fame which the credit card suppose to carry.

In the article below, I would like to cover on the key things to know about credit cards and the financial discipline that one need to follow

Things to know about your card:

1. Card Features: A credit card offered by any financial institution comes with different variants. Based on the individual ability to repay the credit limit will be fixed. The rate of interest will also vary based on cards offered. Also the rewards procedures differ from one card to another.

Financial discipline: Before signing on the dotted lines of the credit card application form, an individual need to understand the terms and conditions which applies to the credit card to be owned by the individual. The individual should spend some time on reading the disclosures statements to understand his/her credit card better.

2. Billing & Payment dates: The billing cycle start & end date and the payment due date are the 3 important dates to know about a credit card. The billing cycle is normally a monthly cycle and purchases during this time frame will be sent out in a statement for payment to be made by the credit card user. “Payment due date” is the date by which the card holder should make his/her payment for the previous billing cycle.

Financial Discipline: Knowing the billing cycle should help one to plan all their expenses especially during the first week of the billing cycle. This gives the card holder a credit period on an average of 30 - 40 days. Remembering the Payment Due date will help one plan their finances to pay the outstanding amount shown on the credit card statement.

It is always advisable to pay the total outstanding in full. Any partial payment will attract interest for the residual amount. We need to bear in mind that credit card interest rate is the highest lending rate amongst all financial instruments available. So due care to be taken while settling the bills.

3. EMI Options: Any purchase made can be converted into EMI’s. These days an immediate notification from the bank pops up on the feasibility to convert an outstanding amount into an EMI. If this conversion does not attract higher interest rates and the expenditure made is the need of the hour then it will be a good idea to opt for EMI.

Financial Discipline: A card holder should know ones monthly expenditure capability. Any spend made should take into consideration the EMI factor and spend to be planned for the remaining capacity. For example if an individual had a monthly capability of up to Rs.10,000 and out of which a pre existing EMI runs for Rs.2,000 , then the card holder should restrict the expenditure for the billing cycle within Rs.8,000

4. Credit card statement: Generally the credit card statement is generated on a monthly basis and this will be a reflection of all the expenditure made & payments done during the previous billing cycle.

Financial Discipline: On receipt of the monthly statement perform reconciliation on all the entries to cross verify whether whatever expended is getting reflected. Any payment made during the past billing cycle should be duly deducted. EMI pertaining to the specified period only to be displayed. In case of any discrepancies reach out to Customer Care before making the payment

5. Reward Points: Most financial institutions which offer credit cards provide rewards for the usage of their cards. These rewards are converted into points and displayed cumulatively in the credit card statement.

Financial Discipline: Never let these points go unattended. The points accumulated can be redeemed against products or services as per the catalog of rewards offered by the financial institution. Once sizeable points have been accumulated and if it can be redeemed against a product or service of our choice then the decision should not be delayed and immediately acted upon.

The financial discipline listed above helps one to lead an organized credit life. Debt will be completely avoided and even if arises, it is carefully charted out, so that it never becomes an undue burden. Careful planning of expenditure will have an elongated credit period on our cards. Managing funds through credit cards helps one to have the money retained in their own account for a longer period and in turn helps gain interest. Hope the article would have changed your view on credit card management and help you effectively manage them going forward.

Efficiently manage credit health, sufficiently increase financial wealth !!!!