Think before you swipe your credit card

Now a days credit card become the most convenient way of shopping for all of us, specially during the festive season like Diwali, but there are a few things you should know before you actually use it.

1) I would say always read terms and conditions before using a credit card because once you use it is assumed that you have accepted the same.

2) A credit card is usually issued for two years and the annual fee is waived off only for the first year. The second year fee is usually charged and if you do not wish to pay this fee, you should cancel the card before using it in the second year because using it indicates that you have agreed to paying the second year's subscription.

3) " Lifetime free credit cards' is a new trend in the industry and before opting for one you should check with the bank if all annual fees are indeed being waived off or not.

4) Always try and pay the entire amount outstanding to the extent possible because all unpaid amounts carry a hefty interest and turns out to be very expensive if you decide to roll your credit.

5) Whenever you make a large purchase on your credit card you will be given an option to pay by EMI (equated monthly installments). It is recommended that you pay the entire amount at the extent possible and avoid the EMI route as it is prohibitively expensive.

6) Never choose a credit card for its insurance cover but for its core offering, that is, more than 50 days of interest free credit if you use it smartly.

7) Avoid borrowing cash on credit card as it turns out to be very expensive because of the interest amount charged. Different banks levy different interest rates on cash borrowed on your credit card. Please ask your credit card issuing bank or company about the interest charged on such transactions.