Hyderabad: Though credit card is a popular mode of payment, using it in the times of COVID-19 is a risky affair and can push you into the debt trap if not used in a careful way.
Read below some important credit card usage tips that help you stay in a healthy financial state in this troubling time.
Consolidate all your credit card debt
The best option in these volatile times is to consolidate all your credit card debt. If you have a good credit score most lenders will be more than happy to offer you a personal loan at a low-interest rate.
If you haven’t opted for a loan moratorium and have low debt compared to your income, then you can easily get a personal loan.
Moreover, banks will also be happy to consolidate debt on another credit card provided that your credit score is good and you have a clean repayment track record.
Don’t fall for ‘convert to EMI’ option
As soon as you make a big purchase using a credit card, you will instantly start getting calls from banks to opt for the ‘convert to EMI scheme’.
Though you may quickly get tempted but don’t do so. This option carries a processing fee and high-interest rates.
Also, your credit card limit will be blocked until the time you don’t make the EMI payments. You will instead end up paying more than the actual value.
Check your credit card bill every month
This is a general practice you should be following.
Check it to find out if you have been additionally charged for anything i.e. any hidden charges, processing fee, insurance premiums, etc.
If you find any such deductions, contact your bank immediately and instruct them not to debit any charges without any authorization from your end.
Come out of ‘buy now, pay later’ mindset
Don’t shop for everything from your credit card. It is a universal truth that people end up overspending when shopping using a credit card.
The thought of buy now, pay later does tempt any customer to engage in extra shopping. Right now, apart from shopping for groceries don’t spend on buying any gadgets, clothes, or any accessories until it is not necessary.
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Remember, these tough times may last longer and your company has not promised you the job for a lifetime.
So spend only what you can repay easily without having to depend much on your source of income.
The moratorium will not benefit you much
Originally RBI offered a moratorium on loans and credit card payments for 3 months, but with the rising number of cases, the moratorium is extended for an additional 3 months i.e until August 2020.
Opting for a moratorium may not affect your credit score much but you will have a hefty overdue amount and interest charges to bear post the lockdown.
Note that for purchases you make during the moratorium period the interest will start accumulating from day one of the purchase.
So if you can easily pay off your credit card outstanding amount then don’t prefer to opt for the moratorium unless you have other emergency expenses to handle.
Don’t lose your credit card
You need to be extremely cautious in these stressful times as you may not get your credit card replaced easily. Banks are operational with minimum staff and losing out on the card has also security implications. So handle your card with much care.
Use the reward points
Banks generally offer you coupons and discounts in exchange for reward points. You can check your reward points in an easy way through your bank’s net banking website. You can use the reward points for purchasing essential items.
The above-mentioned tips are easy to follow for your financial well-being. Ensure that you follow them and never let your bad financial management impact your future finances.
(Written by Viral Bhatt. Author is a personal finance expert.)
Disclaimer: The views expressed above are solely of the author and not those of ETV Bharat or its management.
If you have any queries related to personal finances, we will try get those answered by an expert. Reach out to us at businessdesk@etvbharat.com with complete details.
