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Credit cards have become an integral part of modern necessities. They not only allow safe and easy transaction of money but also help to keep track of the expenses that the customer makes through the credit cards. The customer also gets the chance to repay the credit within a certain grace period and therefore he does not have to get bothered with repayment immediately. Many credit card companies also offer reward points to its esteemed customers which can be used to purchase products at discount rates or avail free air tickets or accommodation.
There are however certain important steps that are to be kept in mind when using a credit card. Wise and planned use of the credit card can only facilitate maximum benefit to the credit card user.
Factors for maximum benefit
- Ensure that bills get paid as soon as they are received or at least within the grace period. A balance carried forward to the next bill cycle will start to accumulate interest rates for every single unpaid day. This will sum up to a huge amount and result in substantial increase in the repayment value.
- The credit card user must ensure that even if he is unable to pay the entire credit amount he pays at least more than the minimum payment due for the current credit card cycle.This will ensure that the more of the credit amount gets repaid lesser interest charges will start to be levied on the balance credit amount.
- Another trick to avail maximum benefits from the use of credit cards is to use the minimum number of credit cards. This will allow accumulation of reward points faster and can be reimbursed later on for various reward facilities offered by the participating companies. The cash back offer as granted by some credit card companies, can also be used to balance the credit card bill thus decreasing the monthly payment.
- Another option that most credit card companies promote is balance transfer. It is a financial tool that helps a credit card user to transfer his current credit balance from an account of higher interest rate to an account of lower interest rate. This allows the credit card holder to pay reduced repayments every month. The bank that holds the new account also offers a zero percent balance transfer program. As per this program the credit card holder is allowed to repay the balance amount without any extra interest rate charged for a particular time period. A customer will be able to have the maximum benefit if he can negotiate for a longer grace period to avail the zero percent balance transfer.