Must-knows before you swipe your credit card

Don't have enough cash in hand to buy the latest touchscreen phone that you always wanted to? No problem. Use one of the several credit cards that you own from various abanks.

Of course using a credit card to buy goods and services you desire is indeed the most convenient way of shopping for millions of Indians, more so during the festive season, there are a few things you should know before you actually do that.

Remember that a credit card is an unsecured loan advanced by a bank or financial institution after ensuring that only those who meet certain credit parameters are qualified to use the credit card.

Here are a few MUST KNOWs before you start using your credit cards.

1. Always read the terms and conditions before using the credit card because once you use the credit card it is assumed that you have accepted the same.

2. A 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 he 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.

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. 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.

7. 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.

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