7 things to watch out while using a credit card

Credit card can be a beneficial financial tool, if used carefully. If not, it can turn into a menace for your finances.

Ideally, you should set a budget before you make purchases through your credit card. And only spend as much you can pay back, after all it's not your money.

Here are few things you should always keep in mind before you become debt-ridden:

1. Limit your credit card use

Usually, there is an interest free period for every credit card. So, in order to avail it, you should ideally keep your credit card dues nil.
As long as you pay the amount on time, you can take advantage of the interest free period.

2. Never postpone your credit card dues

Try making the full payment on the due date even if the credit card statement says that you need to pay a certain per cent of it.

Postponing the payment to next month will levy monthly interest and also late payment fees in some situations.

If you keep using the credit card continuously, your debt will grow.

3. Never withdraw cash through your credit card

Do not forget that cash withdrawals from your credit card will incur both one-time fee plus high interest charges.

So, it is not advisable to take out cash via credit card unless you are in dire need.

4. EMIs and Reward Points

It is recommended that you should always transfer you balance to EMIs (Easy Monthly Instalments). Doing so will help you pay your debt more easily on less interest charges.

Also, every credit card purchase means earning rewards points. Never overspend just to earn them.

5. Allow auto-debit for payment

If you pay your credit card dues on time, you could save a lot of trouble. Thus, you should link your account with the credit card in order to pay your credit card bills automatically.

This way you will never forget your payment date and not incur late payment fees.

6. Keep a strict eye on the charges

You should always check your credit card statement every month to check the charges levied on you.

It can help you keep a watchful eye on your spending habits and also the interest rates charged by the bank.

7. Never exceed your credit card limit

Always remember that your credit card company shares your credit history and score with the government. Failure to make payment on time and exceeding your credit limit can negatively impact your credit score.

Thus, it is advisable that you only use a certain amount of your credit card limit. Pay back on time before you use it again.