HOW TO GET MAXIMUM BENEFIT FROM YOUR CREDIT CARD

TIPS TO USE YOUR CREDIT CARD TO YOUR ADVANTAGE AND TO AVOID GETTING INTO DEBT

 Your credit score is directly related with your credit card usage. The way you use your credit card and the way your payment history is built reflects in your credit score number.Credit card is basically buy today and pay later. there is a very simple methodology in going about using your credit card. but still many  misuse it or overuse it or are not aware as to how to take benefit from a credit card. It is because of not knowing the right way to use a credit card that many people end up paying higher amounts of interest and other charges on their purchases from the card.

As we all know your credit card gives you a certain limit within which you have to make your purchases .This limit is your  total credit limit. out of this total credit limit 30% is your cash limit. So 70% of the total credit limit is the limit available to  you for making your purchases. There is a particular date on which your credit card statement is generated .This statement generation date is your statement date or billing cycle. Then there is another date by which your payments should reach this date is your payment due date. The payment due date is usually calculated as the date on which your statement is generated +20 days.

For example if your statement is generated on say 17 th of every month.your payment due date is 6^th of the following month.

Statement date-17 august 2013-------payment due date-6 th September 2013.

As we are aware that we get 50 days credit time to make our payments.despite that i believe many are not using the 50 days credit advantage wisely to for their benefit.If you make a purchase near your billing cycle then you get less time to make arrangement for your payments

The first tip to use your credit card to your benefit that i would like to share is that if you are planning to make a big purchase on your credit card.Make sure that it is within 70% of your available credit limit given to you by the bank for your purchases.

Second tip is if you are not in a position to make payments within a few days time .then look for making a purchase a day after your statement generation date.Say on 17 th august your statement is generated.You make your purchase on 18^th august.In this way you will be able to avail the 50 days credit time.as you will have to make payment on 6^th of October.That will give you ample time to make payment in full.

Third topic that  i want to share is about minimum amount due.When you make minimum amount  due payment you are saving yourself from being charged with late fees but interest is being charged to you.this way your total outstanding amount will increase every month despite the fact that you are paying minimum amount due as finance charges are clubbed with your total outstanding amount.

This is the reason i stress make purchase after your statement generation date.

In case you miss your payments as you have not received your statement.try to request for statements to be emailed to you on your email address so that you can keep tab of your transactions.Or request for sms facility.

To avoid overpurchasing fix a flexilimit on your credit card.Which will limit your purchases to a particular amount every month.You also go for auto debit facility where on a particular dare payment is directly debited from your bank account in case you have been issued credit card by the same bank  you have an account with.

In case finance charges have been levied to you and you want to make the payment of the entire amount.Always make payment of little extra amount then is due.The reason being say your statement is generated on 17^th august and has been dispatched to you and you receive it on 21^st august.Your payment due date is 6 th of September.Now the bill amount is suppose 500$.This 500$ amount is till 17^th of august.The time from 17^th august till you make payment say on 6^th September interest is being charged which will reflect in your next month statement.So always make extra payment by a few dollars for those 20 days so that the entire amount is cleared off.

To sum it up,Try to use only 30-40% of your available limit.If you are making a purchase of big amount try using your credit card a day after your statement is generated so that you can get 50 days credit period and time to accumulate funds to make payments.Use your credit card to your benefit and smartly.Avail credit in the right manner and avoid getting into debt.