Are you facing trouble getting your credit card debt-free? If yes, don’t curse yourself about it – you are merely one of the thousands of other consumers who feel the same. However, once you choose to change the way you spend on the Credit Card, it is possible to make your credit card balances manageable.

The below mentioned mistakes, if avoided will help you stop adding to your existing credit card debt and start giving you control over your spends.

1. Pay More Than The Minimum Amount Due

It’s very tempting to pay only the Minimum Amount Due every month (often Rs.250 to Rs. 500) and postpone the remaining amount to the next month when you’re under financial crisis. Trust Me, The Next Month Never Comes. My advice here is “Never Do It”.

I will tell you why. Not only will you never pay off your bill, but the interest rates that credit card companies charge will add to the balance every month. Instead, pay as much as you can as payment if you cannot afford to clear the amount. Wherever possible, try reducing unwanted expenditures to focus on paying off the credit card dues. It will be well worth going without any extras like dinners at your favorite café or shopping unnecessarily when it can help you sleep easier in the night knowing that you will soon be free of debt.

Read: What is a Virtual Credit Card?

2. Don’t Use Credit Card for Day to Day expenses

Except in justifying circumstances, you should have your budget under control so that you can at least pay for your monthly expenses with your monthly income. By keeping daily purchases like groceries and utility bills off your credit card, you’ll be taking a major step in the right direction to getting your spending under control.

3. Beware of Credit Card “Rewards”

The reward points that you earn from credit cards, are not any worth if they surrender you to the extra interest rate because of the purchases that you made in order to earn the reward points and then are unable to make full payments. The credit card reward schemes that allow you earn points on your credit card purchases, if calculated often come out to an effective reward of 2% or less.

For example, I get one point for each Rs. 100 spent on my credit card, but you must have at least 500 points to redeem the points, which means that I have to spend at least Rs. 75,000 to accumulate those points. Because the amount of interest that is charged on outstanding account balances exceeds the 2% bonus that you receive, it may not be any worth to incur the interest charges for such a small reward.

4. Never use your Credit Card Overseas

For every overseas purchase you make you could be subject to an international transaction fee and a lousy exchange rate. So, even if you are the perfect credit card customer and pay your bill in full and on time, certainly the card issuer is making money out of you!

5. Never take the Cash Advance Facility

Credit card companies employ many tactics to pull money out of your pockets and providing the Cash Advance facility is one of them, which gives you the freedom of withdrawing Cash on your Credit Card from an ATM. The main reason why taking a cash advance should be avoided is that you start accruing interest the minute you take out the cash. Unlike regular credit card purchases, there is no interest-free period offered on Cash Advance.

Read How are Interest – free days calculated for a credit card?

The credit cards companies will also send you a pin number shortly after you receive the card so that you can use your credit card to get cash from an ATM. This PIN is also sometimes needed for registering and managing your card online. But trust me, what I did with this PIN was that after registering my Credit Card online I shredded the PIN and threw it in the bin

6. Do not apply too many credit cards

If you already know that you are not good at managing credit cards well, don’t give yourself more enticement in the form of more cards. It is also possible to miss payment deadline when you try managing more cards which have different billing cycles and different due dates.

7. Avoid Late Payment Charges

Late payment charges are another source of income for the Credit Card companies and also subject you to additional interest charges. At least, if you cannot afford the full payment, pay the minimum Amount Due and Avoid late payment charges. (Doing this, always keep the Point No.1 of this article in mind)

8. Never Ignore Your Debt – You have to clear it

People become tensed or embarrassed by their credit card debt that they simply stop opening their bills and pretend that the problem isn’t there. This is like fooling yourself. The debt is in your name and whatever be the reasons, you are the one who has to clear them. In addition, while you’re ignoring your bills, interest rates are causing the balance to grow each day. Also, missing on your payments may get you in the CIBIL Defaulters’ list and affect your credit score.

Read: How do I register my Credit Card for Verified by VISA?

Ignoring your debt can also spur the recovery departments into action, and lead to harassment with the unsavory tactics some collectors are employing these days.

Conclusion

Cleaning up your credit card debt takes time and self control, but the steps outlined here aren’t difficult. There’s no reason that credit cards can’t be a helpful and a convenient tool – assuming that you can learn to use them sensibly and responsibly for your own welfare. These tips will help you keep control of your cards instead of letting them control you.

What is the strategy that you follow when you use your Credit Card? What are your views regarding the points listed above. Please mention below if I missed on any important Point that you would like to be shared with the readers.

For Further Reading:

1. How are the Interest- free days calculated for my credit card?
2. What is a Virtual Credit Card?
3. What is a CIBIL Credit Information Report (CIR)?
4. How do I register for Verified by VISA?

We have already been talking about Credit Cards on EquiTipz with some articles like What is a Virtual Credit Card? and How are the Interest- free days calculated for my credit card? written some time back. You may click on the links to read if you missed them.

In this article, I am going to talk everything about “Verified by VISA” which is a Security Program from VISA.

What is Verified by VISA Service?

In addition to our other ways of preventing and detecting fraud, VISA offers Verified by Visa, a free and simple-to-use service that confirms your identity with an extra layer of password when you make an online transaction. Under this service, you are allowed to PIN-protect your Plastic Card usage on the internet. This gives you an added assurance that only you can use your Credit Card/Debit Card Online.

How does Verified by VISA work?

Verified by VISA allows you set a personalised password just like we have the PIN for an ATM. In order to enrol in this service and be secured over the internet, you need to register your Credit Card and choose a secure PIN. This secure PIN/Password will be mandatory whenever you use your credit card to make internet purchases from the participating merchants.

In turn, this requirement of the PIN to be used every time prevents unauthorized usage of your Credit Card when you make any purchase over the internet, giving you more confidence while making any payments online.

Do I need to apply a new Credit Card to avail VbV?

No. You can simply register your existing VISA Card and you are good to go.

How do I register for Verified by VISA?

You can register your Credit Card and activate VbV while you shop for the first time over the internet. Below is a simplified description of the process as given on the VISA Website.

Everything is self-explanatory in the picture above. In the Step 2, you will be asked your Date of Birth, Card expiry details. In case you do not understand anything, please let me know in the Comment Form below. I will be more than happy to help you.

Now, when you make any purchase in the future, you will have to use the same Password that you set above. This adds to the security of the purchases made online provided you donot share this password with anyone.

Is Verified by Visa easy to use?

Verified by Visa is very easy to use. As we have already seen in the above step, when you make a payment on any of the participating online stores, you will be asked for your Verified by Visa PIN. Simply enter your Secure PIN, click on Submit, and you’re done. Next time onwards, you will be required to enter this for all future transactions.

How will the online store know that I have Verified by Visa?

Participating online stores will automatically recognize your Visa Card number if you have registered it for Verified by Visa and take you to the VbV screen where you need to enter the password to proceed making the payment.

Taking into account the increasing number of frauds happening online, this is a great service from VISA and by now every online merchant has made it mandatory to be registered with VbV to make online purchases.

Note: In this article, I have mentioned ‘Credit Cards’. This service is also applicable to your VISA Debit Cards as well.

I hope that the information given above would be of a great help to you. In case you do not follow anything, please feel free to contact us or enter your query in the Comment Box below.

You may also want to subscribe to our free email service to receive the posts directly in your inbox by filling in your e-mail address below.

For Further Reading:

1. 8 Mistakes to Avoid When Using a Credit Card
2. What is a Virtual Credit Card?
3. How are the Interest- free days calculated for my credit card?

Last time we discussed about “What is a Virtual credit Card?” to help you avoid any fraudulent transaction on your Credit Card. In this article we are going to discuss about how to calculate the interest-free days for your credit card.

Nowadays, everyone uses a Credit Card and we are slowly and gradually realizing the benefits and advantages of doing so. Using the Credit Card for all occasions becomes more useful when you know everything about your credit Card. This can help you save a lot for you and you may even end up paying even less amount in most of the cases if you know how to make the best use of your credit card.

Photo Credit: michael_swan

One of the most important components in mastering the use of Credit card for optimum use is to know the interest free days for your credit card.

In this article, we will learn how to calculate the interest free days and how to make the most out of your credit card using that knowledge.

What all I need to know?

Before going any further, you should know the following details of your Credit Card:

Credit Card Billing Cycle: The date when you statement is generated.

Payment Due Date: The last date for your Credit Card Bill payment.

Now, I will try explaining you the concept by quoting an example.

Lets take an example where Sabby holds an ICICI Bank Credit Card. The billing cycle for his Credit Card is on the 15^th of every month and your Payment due date is the 3^rd of each month. Now, every bank gives “upto 50-52 Interest-free days” to pay your bill. Now, what we have to understand here is that what does this word “upto 52 days” means? Because every bank uses this same phrase only.

This is because it is in our hands how many days that you can avail of as interest-free days. Confused? Don’t worry, I will explain.

Take for example as I said above that your statement is generated on the 15^th of December, 2009 for which Sabby has to make the payment on or before 3^rd of the following month i.e. 3^rd January, 2010 (in our case)

Case 1:

If he makes a purchase on the 14th of the month with his statement generating on 15th, he will have interest free period until the 3rd of the following month. So, in this case till the 3rd Jan,10 he will make the payment of the purchase done on 14 Dec. He will have the luxury of only 20 interest free days to pay the bill without being charged any interest on it.

Hence, in this example, his interest-free days are reduced to only 20 days.

Case 2:

But if Sabby goes by the smart strategy of increasing his interest free period, he will wait for some day and control his buying spree till the 16th of December, 09. Doing so, this purchase will be included in the Jan, 2010 statement (as December statement will already be generated on 15th) for which he will have to make the payment for his credit card bill till 3rd Feb 2010.

Hence, in a way in the second instance his interest-free days are increased to 51 days.

Conclusion:

Taking the above cases into accounnt, one may get a minimum of at least 20 interest-free days on your purchases but you can obviously increase them to 50-52 days if you make your purchases smartly in the initial stages of your billing cycle.

Hence, always keep in mind this thing so as to make an intelligent decision about making your purchases accordingly to ease the pressure on you to make payments availing the full advantage of the interest-free period

What are your views on this topic, what strategy do you follow while making your payments? If you have any other strategy to share with others, please put your comments below. your views are highly appreciated.

For Further Reading:

1. 8 Mistakes to Avoid When Using a Credit Card
2. What is a Virtual Credit Card?
3. What is a CIBIL Credit Information Report (CIR)?
4. CIBIL Credit Report; Direct Access by March 2010

YOUR online shopping just got easier and safer with the virtual credit card. But, what’s a virtual card? A virtual card is just like your credit/debit card; only it isn’t tangible. It was introduced to check the rising instance of fraudulent transactions over the internet.

How does it work?
Many banks offer this facility but the process works differently with different banks. However, here’s a general outline:

Let’s assume you have a bank account with ABC Bank. Now, follow these steps to get your very own card.
Step 1: Log on to your online account
Step 2: Register for the use of this virtual card
Step 3: Fill in the amount you will need for shopping
Step 4: The bank will generate an exclusive 16 digit number, a CVV2 number and expiry date for this virtual card

There you go, you are ready for shopping online. However, the card will be valid only for a particular period of time; usually, it’s valid for 24 hours. So, you need to use it within that time frame. It can be used at any merchant website, which accepts the service provider (VISA, Master card) mentioned in the card.

Also Read: How to get over the fear of Investing?

Features of a virtual card
1. It is a safe and risk-free option
2. It has temporary PIN numbers, which assures safety
3. It is time bound; one needs to use it within the time limit specified before the virtual card expires
4. You need to set a limit to your spending and will be eligible to avail the amount specified on the card, which is dependent on the credit limit of your credit card or cash reserves on your debit card.
5. You can use both your credit card and debit card to generate your virtual card!
6. The balance amount, if any, will be credited back to the main account.

There are a few disadvantages:
There could be delay in shipping merchandise, as the merchants might wait to receive the money before dispatch of goods.

Also, you need to complete a transaction within 24 hours. So, forget about paying at your leisure. Once a transaction has been completed successfully, the card cannot be used a second time. There is also a spending limit of Rs 50,000 with most banks that you need to keep in mind.

Cost:
Most banks provide the use of a virtual card for free. You only need to be registered with online banking, and you can generate several virtual cards in a day.

Read: How Rs 1 lakh grows to Rs 50 lakh in 25 years

For Further Reading:

1. 8 Mistakes to Avoid When Using a Credit Card
2. How are the Interest- free days calculated for my credit card?
3. What is a CIBIL Credit Information Report (CIR)?
4. CIBIL Credit Report; Direct Access by March 2010