Credit Card

Evil: Credit Card Or Our Habit

Now a days banks put lot of efforts on getting clients for their Credit Card Services. Every time you visit a super market or a mall you may encounter credit card sales man, who keeps telling you about the benefits of credit card. But 90% of the times we keep ourselves distant from them because we hear lot of negative thing about credit card.

In my view, credit card is a great tool to save money. Credit cards come in various types and each type is meant for/suits to a particular set of individuals. A person can go for a type of credit card as per his requirement not just for sake of having one. You can easily find 2-3 credit cards which will be suitable to your need. Many people believe that credit card are curse and no one should go for it but I personally am a great fan of credit cards because it helps me in saving the money; in fact many a times I get Cash-Back on my regular expenses by using it.

Let me explain what points you should remember whence using credit card which makes it using effectively:

1. Wisely select a credit card: Every one should do a comprehensive research and analysis before deciding on the credit card. Before taking the card, you should carefully analyze certain factors such as: credit card fees, interest rates and other incentive features. You can go for 2 credit cards so that in case of emergency you can use the other one too.

2. Stay within 30% of your credit limit: There will be 2 benefits of it:
a.) You will always use credit card in limit and it will save you from over spending on nonsensical things so that you do not go in debt of the bank. By this way you can easily manage your credit cards.
b.) It will help you improve your credit score for future loan services requirement etc.

3. Track credit card expenses: Normally people do not track credit card expenses on per transaction basis and just like to see the bill when it generates. Many a times people get shocked by seeing the bill amount and curse the credit card for the same. But it is basically our mistake of over spending. Credit card is not meant for spending on whatever you wish to have. Its meant for spending cleverly on the things which are urgent and important. By tracking the expenses you can always keep yourself in limit.

4. Be Skeptical: We should always check our bills the moment it is generated. If you find a transaction that is never made by you; you must immediately inform your lender as soon as it comes to your notice. This way you will exceed your credit card limit without even knowing it and will also have to bear the pain of heavy interest and other charges. A lender can remove the fraudulent transactions and can lock the card instantly to prevent further misuse.

5. Pay the entire Bill, Every Month: The motive behind is to pay off the balance every month. There’s really no middle ground here. In case you do not pay the full bill every month then you have to face huge interest charges on the same and then it can probably become your habit of not paying full amount. You have to have the self-discipline to stop spending when you reach your budgeted limit i.e., 30% of your credit card limit.

6. Using Rewards: After paying regularly via credit card you accumulate the points on credit card, probably the points will be very less in compare to the amount spend. But at least you are getting something in place of nothing as in case of cash payment we get nothing in return.
I am a big fan of the other benefit of credit card which is cash back offers. I always look for the cash back offers before buying or purchasing anything so at least i can save something and in many cases I save handsome amount of money.

It is a well known saying that everything can not be everyone’s cup of tea. Do not use credit cards if your past history suggests that your spending exceed your limit. And give yourself a pat on the back for accepting it honestly. The people who are the most successful at managing their money are the ones who know their strengths and weaknesses and make decisions accordingly.

Hopefully now you can understand the credit card is not curse if one uses it in fruitful way. Credit card is not evil, its our habit which makes it evil. So, use it in effective way and keep in mind the above points.

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Happy Investing!!

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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