How To Use A Credit Card

These days, it is common for almost everyone to have one or more credit cards in their possession.

But not everyone understand how to use a credit card. Some credit card holders only know how to spend on their credit cards till the credit limit is reached. Others know only about using credit cards for shopping and bill payments.

Still others are too afraid of using their credit cards. Yet there also those who are unaware about the ways to protect their credit cards.

So what is it that you should know about using credit cards?

The first thing to remember is the fact that whenever you use your credit card to make a payment, you are borrowing that amount from credit card supplier. As a result, you'll need to return this borrowed money to the credit card supplier within a specified period of time failing which you will incur a late fees and interest on the amount borrowed.

So, you should be careful about your credit card payments. Besides the interest and late fee, your credit rating is also affected and we know how important the credit rating is.

A bad credit rating can lead to rejection of loans applications, mortgage, subsequent credit cards application and even your application for a job.

You should also make it a point never to exceed 70-80% of the credit limit on your credit card. Not only does this shield you from getting into a credit card debt trap but also protects your credit rating.

Credit Card Fraud Protection

Every credit card user should be aware of credit card fraud protection. The good thing is that there is generally a set of very simple precautions that the credit card holder can follow in order to protect themselves from credit card fraud.

All credit card companies supply instructions to this effect at the time of credit card delivery. These include things like reporting theft, signing at the back of credit card, PIN/Password protection etc.

For maximum protection, besides the security related instructions, it’s also important to read through the instructions related to the benefits on your credit card in order to realize the full potential of your credit card.

These include discounts on travel, shopping, car rentals etc. Then there are cash back options as well which have become very popular lately. For travelers, there are some really good benefits too. These include things like free travel insurance and baggage protection.

Generally, besides the regular benefits, the credit card suppliers also include some joining benefits too for the new customers in the form of discount vouchers.

Fees, Penalties, Commission, Other Charges

Another important thing you need to take note is the various kinds of fees, penalties, and commissions charged by your credit card supplier.

Besides the annual fees and APR there are other services too which attract a fee or commission e.g. there is a fee associated with cash withdrawals; similarly there is a commission associated with foreign exchange transactions.

All these charges are clearly mentioned in the instructions booklet that you receive with your credit card and any changes to these are separately communicated by the credit card company.

Credit card suppliers keep coming up with a lot of different offers throughout the year. Be on the lookout for these offers. Some of them might be of interest to you.

Generally, you will receive intimation about these offers at your billing address or even your email address too.

Almost all credit card companies have a membership rewards program too wherein you can earn credit points for any payments made using your credit card.

Once you have accumulated enough points, you can exchange them for free gifts. Very often the catalogue of these gifts is also supplied at the time of you joining the membership reward programs.

It is important to note that there might sometimes be an annual fee associated with the membership rewards program.

So just learn more about your credit card and make full use of its capability.