The ubiquity of credit cards makes it easy to forget how remarkable they are. With just a swipe of your credit card, you can buy thousands of pounds worth of goods. Buying goods is nothing unusual, but what is unusual is that you buy the goods on credit. Credit, if you come down to it, is not always easy to understand. What’s even harder is to understand is how to use your credit card responsibly. In the following paragraphs, we go over some dos and don’ts of using the credit card responsibly.
Some “dos” of using your Credit Card
Be aware of your rights as a consumer when you use the credit card. The Consumer Credit Directive legislation ensures that the consumer is protected from any fraud or bad service for purchases between £100 and £60,260. Under the applicable rule, if you buy a service or good using your credit card, the lender and supplier are jointly liable to deliver the service to you. In case the supplier fails to deliver the goods or services, you do not have to pay for it.
If you have more than one credit card, you can transfer the balance from one card to another to lessen the burden of paying back on the main credit card. Normally there is a transfer fee of about 3%, but it can still save you money if you having a hard time paying off the credit bill in your main card.
You should also use the most suitable card for any given purchase. Different cards come with their own special rates and deals for different types of purchases, so if you have more than one card, you should use the one most suitable for a particular deal.
Another thing that you should do is check your credit card file for a fee of £2 from agencies like Equifax, CallCredit and Experian. You can check the report for any errors, or just see how you use your credit card to improve your credit card usage.
Some don’ts of using a Credit Card
Credit card applications are a part of your credit file or credit history. Too many rejections from different credit cards companies can decrease your chances of getting a credit card even further. Therefore, make sure that you do not apply to too many credit cards only to get rejections from them. Apply to credit cards where you have a higher probability of being approved.
The following is not just a do, it should be taken as a never: Never use your credit card for cash withdrawals, especially for long term (more than a few days.) The interest rates for cash withdrawals from credit cards are sky high, and are best avoided. Better to ask your bank for a personal loan.
You should also not just pay the minimum amount due each month. Paying only the minimum may seem attractive at the moment, but in the long run it costs you money because it increases the applicable interest rate on your present and future balance. With average annual interest rates of about 18%, having a balance on the credit card is a costly proposition.
Finally, while closing a credit card, do no close a card which has a balance to your name. This will negatively impact your credit history. All these dos and don’ts, when followed as suggested, should help you use your credit card responsibly, and keep you away from paying your hard earned money to credit card companies.