Why is credit card usage complained about by many? What are the common pitfalls while using credit cards? How are credit card purchases charged, and what is the billing cycle? What is the optimum payment cycle?
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Thank you.
From India, Pune
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Please reply.
Thank you.
From India, Pune
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Hi S_K,
Without financial discipline, credit cards can become very hard to manage. The reason why credit card usage is criticized is that with a credit card in your pocket, a purchase that you would otherwise postpone due to a lack of financial resources becomes tempting to make. The interest rates on credit card purchases are very high - in India, it's between 1.9% to 2.5% monthly.
Each issuer has slightly different payment cycles. Usually, when you purchase goods and services using your credit card, no interest is charged if the entire amount is repaid within 40-45 days; otherwise, the interest payment begins. All payments made are first adjusted towards the interest and penal interest payments, and only after these adjustments are made, is the balance payment adjusted towards the principal.
It is better to use a credit card for convenience and not credit. If you use the credit card, pay the outstanding amount within 40-45 days and avoid getting into the interest payment cycle.
Hope this helps.
From India, Bangalore
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1Without financial discipline, credit cards can become very hard to manage. The reason why credit card usage is criticized is that with a credit card in your pocket, a purchase that you would otherwise postpone due to a lack of financial resources becomes tempting to make. The interest rates on credit card purchases are very high - in India, it's between 1.9% to 2.5% monthly.
Each issuer has slightly different payment cycles. Usually, when you purchase goods and services using your credit card, no interest is charged if the entire amount is repaid within 40-45 days; otherwise, the interest payment begins. All payments made are first adjusted towards the interest and penal interest payments, and only after these adjustments are made, is the balance payment adjusted towards the principal.
It is better to use a credit card for convenience and not credit. If you use the credit card, pay the outstanding amount within 40-45 days and avoid getting into the interest payment cycle.
Hope this helps.
From India, Bangalore
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