Tuesday, November 10, 2009

4 things you should never do with your credit cards

Browsing through at Yahoo as usual and found some good tips to manage our credit cards. Here are the tips I find it quite useful for those who has credit cards debts: -

1. Don't make only minimum payment. It stretches your payment plus the interest rate of 18% p.a will significantly increases your total costs. Many have been mislead by 1.5% per month as low rate, in fact you are paying 18% per year which is consider the highest rate and most profitable loans to all commercial banks. For those who has housing loans (5% - 7% p.a) or car loans (1% -5% p.a ) should know these big cap, so don't screaming for pain.

2. Don't carry so many credit cards. You lost track on your spending with multiple cards and ended up with debts that you could not pay. It increases possibilities of misusing your cards due to the temptations at display columns and ads posted on fashion magazines. To better manage your cards, reduce it to 2 cards. One meant for normal purchases, ie. petrol, your households bills and normal shopping. Another one for emergency purposes, meaning do not use this card unless is a "must". Do consider to take down all your purchases and to settle all your purchases every month.

3. Don't miss payment due dates. Your credit card company not only charged you "late charges" and it will recorded your repayment record in your credit report, like CRISS. This may causes you to have difficulty in getting loans in the future. The solution for your busy schedules at work and avoid to miss your credit payment is to sign up a e-banking or phone-banking so that you can do transfer to make payment. And, set alert in your mobile phone to remind you 2-3 days before due dates.

4. Don't take cash advances. Avoid THIS due to its high interest rate which is calculated on daily basis and some credit companies also charge additional service fee for this facility.

In fact, the above notes is to remind myself to avoid spending and settle all my purchases every month. And, I only purchase if i have the Cash on hand and purchase what I need only. Try also use Cash to purchase instead of your credit cards.

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