Some people are afraid to use credit cards because the interest on them is many times higher than on other consumer loans. For others, the credit card is an essential part of life. They can use it every day, earning bonuses. So, let’s discuss 10 tips for safely using your credit card online!
Credit Cards
So, credit card. Two words, two key functions: card and credit. The first function is to avoid lugging around cash and the risks and inconveniences associated with it. The second function is to allow yourself to buy something right now on credit if the amount you need is not available. Functions are actually quite useful – shouldn’t they be recognized as modern, technological, and in-demand financial services? Another thing is that you have to pay for both services, of course.
- Once You Receive Your Card, Don’t Be in A Hurry to Withdraw Cash from It
Most banks charge you a fee for that. The same is true for Payment card transfers. Such transactions are often equated to a cash withdrawal. In this case, the bank will also charge you a fee. However, you can and should use your credit card to pay for purchases, utility bills, fines, gasoline, and travel tickets. That is what it is designed for.
- Grace Period
For a fixed period the bank grants you the possibility to use your card funds free of charge, i.e. you won’t pay any interest. It varies from one bank to another: you can have a 50- or 70-day grace period. Banks may also offer you a relatively long period of free use of your money immediately after you sign up – up to 100 days or more – in order to attract clients. Then it can be shorter, reduced to the standard 50-60 days. Again, you need to read the terms of the contract very carefully. The grace period includes the accounting (or settlement) and payment periods.
- Reporting Period
A period of time during which you can use the bank’s money at your own discretion, up to a specified limit. The period may begin on the date of the first purchase, the day the credit card is issued or its activation – it is up to the bank to decide. When you apply for a credit card, it is better to clarify this right away.
- Minimum Payment
A mandatory amount that you must pay during the repayment period in order to pay off your debt. This is your way of proving your ability to pay. The minimum repayment depends on the rates and conditions agreed in the contract when you open the card. As a rule, it is 5-10 percent of the amount spent with the card.
- The holder of a credit card is also obliged to repay the entire sum spent before the expiry of the interest-free period. These two conditions allow you to use the credit card and not to pay interest on the money of the bank. If circumstances do not allow you to fully repay the money spent on your card, you should make at least a minimum payment. However, you should be prepared for interest to be charged on the remaining amount.
- If the grace period has expired but the debt is still outstanding, the credit mode will be activated and will incur a fixed interest rate and require regular payments to be made into the account. You can make a full repayment in one installment.
- The most effective option is to pay the full amount owed in one go. You can do this either during the grace period or after it has ended. If you make the deposit before interest begins to accrue, you won’t have to pay the bank any loan costs at all. But even if the grace period has expired, paying off your debt in a single payment will minimize your overpayment.
6. Repayment in Minimum Instalments
The minimum repayment is the regular amount set by the bank for paying off the credit card debt. It consists of a mandatory payment, i.e. from 3 to 10% of the outstanding amount, and interest at the rate specified in the contract. Making regular minimum payments according to the monthly payment schedule is the easiest, but also the longest. It has the advantage of the most loyal burden on the borrower. The disadvantage is the maximum amount of interest and the impossibility of using the borrowed funds again. After all, the credit card has a limit: it is made up of the available balance and the amount owed. The more you owe, the less you can spend. The longer the repayment period, the more expensive the loan.
But if you want to get even more benefits from using your credit card, be sure to sign up for Sam’s Club. New members must register their account with their card number, zip code, and contact information. You can access your credit card account by providing a user ID and password. If you are a new member, you can get five percent cash back on gasoline purchases. You can get three percent cash back on lunches and destinations and one percent on every additional purchase on samsclubcredit.com login.
7. Repayment in Any Amount
Unlike a loan, a card doesn’t have a clear repayment schedule. The only obligation is to make the minimum payment. You can’t skip it or not pay it; it becomes overdue and gets interested. You can, however, make more than the minimum payment. The more you pay, the lower your next minimum payment, your interest on the loan, and your total overpayment.
8. How Can I Speed Up Paying Off My Credit Card Debt?
The most obvious tip is to try to reduce or eliminate all credit card spending. If your debt won’t increase because of repeated spending, it will be easier to pay it off.
9. If You Do Need to Use the Money, Use It Only for Cashless Payments and Do Not Withdraw Cash from ATMs
The thing is that most banks charge a fee for cash withdrawals, which will increase the amount owed, whereas non-cash payments are not subject to a fee.
10. Don’t Pay for Everyday Things with Your Credit Card
The basic rule is that you should have enough of your own money to pay off the debt on your card. It’s better to save for major purchases than to use your credit card money. If you don’t have enough to buy now, put it off until a better time. Don’t take any chances, even if you are sure that you will get your salary in a week, as anything can happen during that time. You could get a late paycheck, your company might go bankrupt or you could get fired. Only buy the things you would buy if you have the money to buy them.
Bottom line
So, use such a powerful and highly effective “drug” as a credit card wisely, in reasonable amounts, strictly according to the instructions, and keeping in mind the side effects. Although a credit card is a supportive and sometimes helpful drug, it will never replace your own financial health or make you wealthier. Even if it gives you that illusion for a while… So, I hope now you know how to use your card safely!
