It's perhaps more important to know what to avoid when you're using your credit card than to know how to maximize your benefits.
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Pitfalls to avoid in using your credit card
It's perhaps more important to know what to avoid when you're using your credit card than to know how to maximize your benefits. Let's look at how you should not use a credit card.
A credit card is a personal authorization to you for spending money that needs to be paid later. It is an instrument that can be easily misused if it falls into the wrong hands. It is therefore important for you not to hand over your credit card to someone else even for a short period, and certainly not for a considerable period of time. In fact, the best approach would be never to part with your credit card. Always remember that you are personally responsible for the use of your credit card, and take proper care just as you would with hard cash.
A credit card is a great convenience when you are traveling or shopping, because you don't need to carry a huge amount of cash with you. At the same time, you should remember that a credit card is not a means for generating loans. You should avoid using credit cards for purchases for which you are unlikely to be in a position to pay for immediately.
Avoid using credit cards to make your routine purchases or to meet your regular expenses. If you do not pay up when the amount is due, and use your credit card to tide over temporary cash problems, you will end up paying a substantial amount as interest. On the other hand, if you intend to pay up the dues immediately on receipt of the statement, but have also used the card for other major purchases that you intend to pay off in installments, you are again the loser, because your regular purchases will be charged interest as long as you have other dues on the card. The best policy is therefore not to use your credit card for routine expenditure.
Never use your credit card to pay off other debts, unless it happens through a transfer of balances on favorable terms. People who use their credit card to withdraw cash to pay off their other loans are most probably jumping from the frying pan into the fire, or worse. In most cases the interest and other charges on credit card balances are much higher than on other loans, so that you are actually a loser if you try to pay off other loans by using your credit card.
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