Credit Card Pointers

Written by Doyle Minhas.

A credit card can feel like a luxury to some of us when we’re approved for them. This is because we get to buy items without feeling the pinch of the money leaving our wallets till the 21 days interest-free grace period expires. We have 21 days to gather payments for our purchases, without having to pay interest on them! This model serves as a great set up for a debt trap and I’m sure we have all heard stories of people falling into credit card debt and tarnishing their credit history.

If we treat credit cards only as a bonus for earning rewards and cashback, it is possible to avoid falling into this debt trap and paying unnecessary dollars in interest. In that case, you’ll actually be “richer than you think.” Here are a few things you should know about credit cards:

  1. Statement Balance: You only need to pay off the statement balance on the due date, not the balance owing and certainly NOT the minimum balance, to avoid accruing interest. If you just pay your minimum balance, you will have to pay hundreds of dollars of interest in the future.

  2. Cash Advance: A CASH ADVANCE on a credit card is NOT the best option for you.This is because the interest rate that credit card companies charge on a cash advance is different and higher than the interest they charge on purchases and it starts accumulating from the day you take out that advance.If you are facing a cash crunch, you can go for a personal loan which is usually at a much lower rate of interest than credit card cash advances. You also have the option of going for a payday loan which is good only for a very SHORT period of time as its interest can quickly accumulate if not paid on time. In that case, it may be worse than a cash advance.

  3. Other benefits: Check out ALL the benefits of your credit card. In addition to movie points or cash back, many credit card companies also offer insurance on certain purchases like phones and/or travel insurance. Make sure to take advantage of all the perks!

  4. Foreign currency conversion: If you’re traveling or making a purchase in foreign currency, make sure you understand how the foreign currency conversion works for your particular card and if there are any fees involved for the same.

  5. Secured credit cards: For those who don’t have any credit history, like newcomers, or those with messed up credit can opt for secured credit cards. A secured credit card is a great way of building credit. The bank or company will take a fixed amount from you as a security and offer you a secured visa or MasterCard with a credit limit equal to the amount you tendered as security.

  6. Closing credit cards: Different rewards on different credit cards can tempt you into opening a bunch of them. But, it is best to have a limited number of credit cards as it reduces the risk of overspending and falling into the debt trap and you have fewer accounts to manage. If you do want to close an account, refrain from closing the oldest one with the longest credit history especially if it is in good standing. A lot of companies pay attention to your length of credit history when extending a loan and the longer history you have, the better.


If you’re going to spend money, why not use your credit card and get something back from it? More importantly, credit cards are a great way of building credit history and a good credit score (650 and up) will help you in securing loans at lower interest rates and can even help you land a good job, as they prove your integrity and reliability. So, don’t be afraid of using your credit card but, use it WISELY!

If you have any other questions regarding credit cards, please don’t hesitate to ask in the comments below.


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