Now it is an absolute necessity to possess credit cards for a variety of everyday needs. Having only one card is passe. You need multiple accounts. So, it is imperative to know how to use them to your benefit. Here are 10 basics you should remember while you shuffle your cards:

1. Credit Limit Not Your Income
You may feel buoyant when banks offer you high credit limits. What you should always remember is that these limits do not constitute your income. You will have to pay back every penny taken out of these with interest from your income.

2. Avoid Paying Annual Fees

Lifetime free credit card is becoming the norm now-a-days. Some banks charge one time payment for giving this facility. You should avoid paying this along with annual fees by negotiating with the banks. If not successful, you can switch over to lifetime free card offers.

3. Say No to Priced Upgradation

Banks offer to upgrade your card to Platinum or Titanium all the time if you do not already possess such cards. They charge you a one time fee or annual fee. Unless you need this absolutely say no and insist on free conversion.

4. No Cash Withdrawals

Though you get attractive cash withdrawal limits on your cards better desist from withdrawing cash from your card accounts. Cash withdrawals are costly with a transaction fee plus interest from the date of withdrawal irrespective of whether you pay if full or part. There is no free credit period for cash withdrawals.

5. Do Not Get Into Revolving Credit

Revolving credit means your total outstanding is paid only in installments as per your convenience thus attracting normal rate of interest from the date of a particular transaction. Try not to fall into this cycle if you can help it and if it is not possible then try to finish up the outstanding quickly.

6. Always Consider Total Amount Due

Do not ever go by the Minimum Amount Due as this may initiate you into an endless cycle of revolving credit which is worse than the one we talked above. Always see the total amount due and try to clear it fully as often as possible. This saves you interest charges.

7. Pay Your Dues Regularly

Never default on your monthly payments. Good payment record will keep your cards in good standing making you eligible for the privilege offers some of which could be truly beneficial for you. If you are extremely hard pressed pay the minimum due for that month and if you are out of town or country arrange with the banks to make the payments.

8. Time Your Shopping

Time your major shopping in the 2-3 days next to the monthly statement dates of your accounts so that you can enjoy a maximum free credit period of 45-50 days.

9. Consider Credit Card Loans

You should not debug yourself from credit card loan offers. Sometimes these offers come at very low fixed rate of interest and taking such a loan to buy a car may cost you less than the normal automobile loans. These offers are always momentary and you will have to take instant decisions.

10. Consider Co-Branded Cards

A bank may tie up with a service provider and offer you a co-branded card. Such cards carry a premium. You can consider such offers and if it is the service provider you use frequently and you stand to gain a lot even after paying the premium you can go for it.

So then, go ahead and make your credit cards work for your benefit only.

Tags: Accounts, Bank, Card accounts, Credit Cards

This entry was posted on Sunday, May 24th, 2009 at 5:46 am and is filed under Credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.