how to rationalise credit card usage?

Question

if you just pay the minimum maount due, then the principal amount due keeps on increasing and then may cause payment problems later. If you pay the total outstanding amount due on your card everytime, then you are not enjoying its benefits. so, where to balance in between these two options??

please advise...

Answer 1

Not all assets add to your earnings/savings/wealth of their own, unless you put them in proper use. This plastic money power (credit cards) are among them.

It starts from selecting the appropriate card - based on knowing its terms of issue and usage beforehand and most matching with one's needs and habits. Then comes their proper usage to extract maximum out of them. Credit cards offer good purchasing power and if the owner can use/ manoeuvre such power to one's benefit, one saves good money, and earn too these days, on each payment made through this channel.

Whether one pays full or 5% of the dues, it depends on one's fine tuned planning and needs AND from person to person. There may not be standard rules for one and all and for all situations even for an individual. Credit cards are mere tools in the hands of the consumers, it is for the consumers to make best use of them. For the last over 21 years, I was never without a credit card and I love to use it as my first option of payment in general.

Answer 2

You're mostly right in your analysis. First, look at it from the point of view of the credit card company. They arent' trying to make your life better. (They ARE, but...) they are trying to help their bottom line. This is done via interest.

A lot of cards give you thirty days to get the amount paid off if it's one that has a grace period. Two ways to work this to your favor:

one, get an interest bearing checking acount. Then buy EVERYTHING you can on the card. (Leaving the money in the account to draw interest. Now when you pay the card, you're not only not paying interest... you're making interest on what would otherwise be everyday purchases.

Two, compound this... get a mileage plus card from your favorite airline (or barnes and noble or whatever melts your butter). Earn miles for every DOLLAR you spend!!

free miles and an interest payment to you - just for using the plastic.

Answer 3

I found 3 ways to use a credit card benefitially.

1. Buy a house hold item like TV, FRIDGE,DVD etc., without any documentation or guarantors and pay the amount in instalments for 6 months or so to your convenience. This avoids paperwork, guarantors and delay in delivery.

2. Even if you have money, buy the above things in card and pay within due date without any interest and you can earn more interst/profit on your money in mutual fund or shares for this period.

3. use the card as you use like every body though it is expensive, you will enjoy the cash at need and never default any payments which will penalise you with heavy losses.

Good Luck

You may write to me at [e-mail]

Answer 4

Some credit card offer you interest free period when you shop and you will recieve you bill with due date and minimum to pay options so if you pay before the due date you donot get any interest charged. therefore you are able to enjoy few days of shoping without having to pay interest, you can use them when you donot have money or its easy to carry als its safe to carry. These are benefit but better option not to have credit card you should learn to save and go.

Answer 5

If you use your credit card and pay minimum amount every time then it is very very expensive. You will have to pay the interest for the remaining amount. But if you use it stricly according to the billing period then and only then it is beneficial. Be careful.

Answer 6

We have a cash back card with no annual fee. We pay up every month with on-line bill pay. We pay no check fees or postage. We pay no interest fees yet we make money off our purchases. We come out ahead.

Answer 7

accumulated credit card debt should not exceed 10%
of your annual income.

i keep mine at 5% and less.

Answer 8

Dont use your card for consumables like food and petrol. Use it for non-consumables like clothes, electronics, etc.

Answer 9

don't spent


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