Friday, December 22, 2006

Using Credit Cards effectively

Credit cards are here from long time and Lots of people use them around the world. However, still a doubt for them exists in many peoples mind. We see many people coming everyday in the trap of credit cards and losing their money. Here who should be blame, the credit card or the user? If we see deep inside, both are responsible for it. Credit cards, are promoted as the alternative for hard cash.

We don’t require carrying cash. We can pay our bills and use cash on emergency. Main advantage is that unlike debit cards, they are not directly attached to our bank account. We require paying the money either completely or in partial installment after some time. If we pay in some particular period, we are not charged any interest. Moreover banks provide lot of schemes like reward points and money back offer.

All these things look very attractive. But the reality is not as good as it appear to be. Many people fall in the trap of credit cards and found themselves in difficulties. Is this a fraud? If not then by these difficulties come. The main reason behind it is that regulation related to cards is difficulties and sometimes misleading. For example bank says that the bills paid in 50 days will be interest free.

Bank counts its 50 days from its billing date of credit card and not from the date you have purchased the item.For say you have purchased item on 22nd of the month and your bill date is 25th of month. Now your bank will give you 20 days from bill date of credit card to pay the balance. Therefore you got only 23 days. But if you purchase goods on 26th, then your credit card bill will be generated on 25th of next month and you will be allowed 20 more days to pay the bill. Thus you got complete 50 days. Many people are not familiar with these formalities.

Moreover bank says you to take your balance to next month by paying some minimum amount. This is known as revolving balance. It looks very attractive, but it has its drawbacks. First you don’t get interest free on purchase if you are in revolving balance. So people got in this trap and land up in huge balances.Recently Supreme Court of India has warned the banks to give the clear details and send the bills on time. It has told the banks that if information’s are misleading or bill reached late, then the customers will not be responsible for it.

Lastly credit card frauds are very much common these days. Recently an Indian BPO employ was found selling the detail of British card holder. Card is like cash, anyone who has the number and security code can miss use it. So we require using it safely. Many replica sites have come up, to just steal your card information. But card like visa has introduced net card with limited liability for it.Nutshell credit card has its benefits and disadvantages. But with certain awareness we can use them properly. And by following the instructions we can avoid frauds.

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