Credit Card – A Complete Walk-through About Everything

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Credit Card – Should You Have Credit Cards? If Yes Then What Is The Right Way Of Using a Credit Card? Let’s Get To Know In This Article.

How To Earn Money Using a Credit Card – 

Hey Folks, We Get To Listen To a Lot Of Bad Thing About Credit Card From Everywhere. And They Are Absolutely Right Too To Some Extent. But In This Article, I Want To Share With You All The Ways Through Which You Can Actually Use The Benefit Of Your Credit Card.

You Can Actually Not Just Make Money From The Credit Cards But Also Avail Its Benefits Provided To You By a Credit Card Company, Which Are Usually Not Spoken About, Here I Will Share Three Things With You In This Article.

  • How Can a Credit Card Became a Disaster? If You Do Not Use It Wisely, It Is The Worst Financial Trap You Will Find Yourself In.
  • If You Want To Take a Credit Card, Then What Is Right Way To Use It? Three Things That Credit Card Gives You, Which Very Few Other Instruments Are Able To Give You & It Is The Best Thing That You Can Ask For Actually , Especially If You Are In 20s Or You Have Just Started Working Or Even If You Are a Student.
  • If You Want To Take a Credit Card? Then What Is The Right Way To Do It?

Why Credit Cards Are Harmful? 

Firstly Credit Card Is a Very Powerful Psychological Tool. Which Mean, You Feel That You Have Money Wheres In Real, You Don’t Have It. You’re Taking a Loan From Someone With The Hope That You Will Be Able To Pay Back In Future. Because Whenever We Take a Loan, Its Is On a Forward Hope. You Take Home Loan, Car Loan, Education Loan, You Don’t Really Have The Money For All These, But You’re Hoping That Something Changes And Future Income Is Able To Afford That Money And Then You Will Pay It Back Slowly.

But Credit Card Is Worst Form Of Loan, You Are Actually Spending On Your Daily Needs Or Your Entertaining Purpose Or Your Desire Purpose And Don’t Have The Money To Do That Plus Then It Tricks You Into Believing That You Can Gradually Pay It Back, But That’s Where Comes The Second Part.

Whenever We Take a Loan, Then Usually We Mortgage Something, But When You Make a Payment Through a Card, Then You Are Not Mortgaging Anything At That Point , There’s Nothing That You’re Paying Upfront. That’s Why The Risk On That Loan Is The Highest For The Credit_Card_Company Because They Don’t Know Whether You Will Be Able To Pay Back And This Loan Or Not And That’s Why They Charge You With The Highest Interest Rate.

How Much Interest Rate Does Credit Card Company Charge?

  • You Get a Home Loan At 8-9%.
  • A Education Loan At 10-12% Interest Rate.
  • A Credit Card Loan, Not a Loan, The Payment That You Make Using a CC. If You Don’t Pay It Back, Then Its Yearly Interest Rate Is “35-40%”.

Its Is Criminal & This Become A Loop So Soon That You Don’t Even Realize Because Of The Third Thing.

How Do Credit Card Companies Makes Money?

When You Make a Payment To a Shopkeeper Or an E-commerce Website Through a Credit Card, Then The Person Who Is Getting That Payment. They Have To Give Certain Percentage To The CC Company To Accept That Credit Card Payment. Which Is Usually Between 1.5% – 2.5% Which Is The First Source Of Income. You’re Not Spending Anything In This.

But Second Is This That i Spoke About. Whenever You Don’t Make Full Payment. If You Get a CC Bill Of Worth Rs.100 & You Make a Payment Lesser Than Rs.100, Then The Credit Card Company Charges You a Interest On The Remaining Amount And That Is The Second Way Of Them To Earn Money Which Is a Far Bigger Chunk Of Their Income. But Since This Is a Far Bigger Chunk, Then How Do They Earn Money?

They Introduce Something Called “Minimum Amount Due” And This Is a Trap. Minimum Amount Dues Means That If You Have An Outstanding Bill Of Rs.100 On Your Card, Then The Credit Card Company Says ‘You Don’t Have To Pay Full Rs.100, You Just Pay The Minimum Amount Due, Then We Will Not Block The Credit_Card, You Can Use It The Same Way Month Till It Is Within The Credit Limit’, And Usually That Number Is Between 5-10%. Which Means If Your Credit_Card Bill Is Of Rs.100, Then They Will Say ‘Pay Rs.5-10 & Your Credit_Card Will Keep Working’ And Then We Think “It’s Great”. I Bought a Phone Worth Rs.50k And Now I Have To Pay Rs.2.5k, 3.5k, 5k And This Credit_Card Will Keep Working And I’ll Pay Up Gradually.

But What You Don’t Realize Is That An Interest Of 35-40% Is Being Levied On The Remaining Amount And Slowly Gradually, This Becomes a Massive Number. If The Number Become So Huge That It Is Beyond What You Can Afford, Then You Will Default On It. That Then Destroys Yours Credit Rating.

 What Is Credit Rating?

Each Person In This Country Who’s Taking a Loan, Whether It Is Car Loan, Home Loan, Educational Loan, Credit Card. All Of Them Have a Credit Rating WHich Means How Regularly And In Disciplined Fashion. Are They Paying Back The Loan. And Whenever You Take a New Loan Then Bank Which Will Be Giving You That Loan Will Check Your Credit Rating And If Its Not Good Then They Will Not Approved Or It Will Very Expensive For You. Which Means Higher Rate Of Interest.

That Is Just The Worst Way To Start Your Financial Journey So If You Are In Your 20’s Or You’re a Student. The Please Keep These Things In Mind. Before You Start Using a Credit_Card.

What Are The Advantages Of a Credit Cards – 

  • Interest Free Loan – Whenever You Make a Payment Through Credit Card, Your Bill Is Raised Or Generated After a Month, Which Means That Someone Giving You An Interest Free Loan For a Month, Which Is Really Great. So Think Of It Like, You Made a Payment Of Rs.10k And You Have To Pay It Back After a Month That Means That You Actually Have That Free Money To Do Whatever You Want To Do With It. You Can Easily Do Short Term Investment With It & Make Free Money From That.
  • Improve Your Credit Rating – Since You Making All The Expenses Through Credit_Card & You Have The Money, So Whenever The Payment Is Due, You pay 100% And Thats Make Your Credit History Because You’re Paying In Full & You’re Paying Regularly, Your Credit Score Keeps Going Up And That Is Great Way For You To Get An Important Loan In The Future.
  • Earn Freebies – And Lastly You Get Freebies, You Get Points Using Credit_Card, Keep Collecting All Those Points And You Can Eventually Use It On Something. Which Can Get Converted Into Whatever The Gifts Are That Your Credit Card Companies Gives.

What Is The Best Way To Use To Use a Credit Card?

  • First Of All, If You Do Not Have a Credit Card, You’re a Teenager, Student, Or You Have Just Started Working, Just Get a Credit Card That Has a Zero Yearly Charges. There’s No Concept Of Minimum Balance, Nothing. Basically They Will Just Give You a Credit Limit Here Credit Limit Means Bank In a Way Says That You Can Use Your Card Up to This Limit. Either It Is 15k, 25k, 50k Whatever. But Get’s a Free Card That’s Most Important.
  • Second All Your Expenses On The Credit Card, Provided You Actually Have The Money For It. So Please Never Buy Anything On Card For Which You Don’t Have The Money. That’s a Warning And a Request.
  • And The Third Whenever The Credit Card Bills Comes, Do 100% Payment In Full. No Minimum Amount Due, No Small Amount. Literally To The Last Decimal Point Even Paisa. You Will Fill The Exact Amount.
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