Credit cards are the best method of payment if you know how to use it

As long as you use them properly, credit cards can have a number of advantages over debit cards and cash payments. Getting an interest free loan. Some credit cards offer a 0% interest period that effectively lets you borrow for free, providing you make your monthly payments.

If you are new to use credit cards or if you are considering opting for one, here are some basic things u must be aware of.

Don’t withdraw cash using a credit card

Don’t use your credit card like your debit card. Here your interest rate kicks in as soon as you withdraw money from the ATM. Unlike when you swipe your card and get a grace period, the ATM withdrawal doesn’t have a grace period.

Hence, avoid using credit cards for cash withdrawals. Usually the limit on ATM withdrawals is lower than the credit card limit.

Make use of your card’s grace period

All credit cards come with a grace period to pay the bill. Grace period is the time given to you to pay back the money you spent using the credit card, without paying an interest.

Usually credit cards come with 50 days grace period.

Hence, if you make a purchase at the 11th of the month you will get the entire 50 days’ grace period to pay the bill. Paying bills on or before the due date means you don’t have to pay any interest. Also when you are disciplined with your credit card bill payment, you will see a positive impact on your credit score and credit history.

Read all the charges of your credit cards

Usually all credit cards have charges such as annual fee, joining fee and late payment charges. Most credit cards have similar structure. However, the charges can differ based on added services. Hence, you should compare the fees and understand the cost of the credit card before opting for one.

Also you should check the reward points and the value of it as it varies across the credit card platform. Some credit card companies waive off credit card fees completely too. You can also negotiate with the bank to bring down the cost.

When you start using a credit card make sure to not go overboard on spending. If you don’t pay your bills on time, the interest rate is around 22-48% per annum.