Trouble shootingTo derive the maximum out of your credit card, be sure that you start off on a sound relationship with the issuer.
Having decided to spend on your card, it is better that you decide your repayment options right away.
Every month, usually around the second half of your interest-free credit period, your bank will send you a statement.
You have two choices: you can settle it fully, or decide to pay partially (usually five per cent of dues) and roll over the rest.
Some cardholders get into trouble at this point in time if they choose the second option: the interest starts mounting because all spends incurred after the decision to roll over start attracting interest till the whole amount is cleared.
And you may soon find that you are paying more on account of not settling on time than on spending through the card.
And remember, interest rates are a minimum of two per cent a month and can go up to three per cent a month for some card issuers.
Default-related problems arise for two kinds of people: those who don’t know their ability to service monthly, or those who are unable to figure out how much their credit is costing them.
Given below is a list of warning signs that all credit cardholders must note to avoid knocks on their doors from their card companies’ bill collecting agents:
Do you often pay only the minimum due on your credit cards each month?
Do you use cash advances to pay credit card or other debts?
Do you regularly exceed your credit limits?
Have you tried to borrow money from friends or relatives?
Do you use one credit card to pay off your bills from other credit cards?
Do you look for credit cards with free first year annual fee and cancel it when the year is up?Note: The above information has been sourced from Visa’s Payment Guide booklet for card users.