Manage your credit card effectively and save more!

30th October 2015


The scary part of using a credit card is being caught in the vicious debt cycle. With the exorbitant markup rates on credit card debts, many consumers are detracted from even availing a credit card facility from a bank. However, there are certain advantages to using a credit card in Pakistan and techniques on optimizing your expenditure and repayments.

The first and foremost activity should be to set a credit limit which is equivalent to a person’s monthly income. This is essential to keep one’s feet firmly planted on the ground. A credit card whose limit is equivalent to the net income can be paid off any month. Secondly, it is important to ration the usage of a credit card. Though tempting, one must learn to control the usage of a credit card at every shopping outlet or restaurant. The necessary expenditures such as fuel and groceries can be conducted through credit cards because necessities should take precedence in the monthly budget. Additionally, some credit cards offer discounts on fuel and grocery purchases. Such schemes would not only help in optimizing credit card usage, but also provide relief in monthly expenses.

Some people use credit cards as supplementary income. If such an act can be controlled, credit card spending can be optimized. For this purpose, it is recommended that sufficient cash be carried around for daily expenses to limit the use of plastic money. If you are carrying a debit card, it is advisable to pay for daily expenses through your debit card as well.

Rationing the use of credit cards is only the first step in optimizing your expenditure. The difficult part is the repayment. We, at MyBankersOnline, strongly recommend all credit card users to pay the full amount due. This completely eliminates the threat of credit card debt. A normal credit cycle allows you up to 51 days of interest-free period for repayment. If you are unable to pay the entire amount in one transaction, use this time to make partial payments. 51 days cover nearly two salary cycles for an individual. If the credit card limit is equivalent to the net income, timely repayment should not be a burden.

If you choose to revolve on your credit card, it is advisable to make repayments greater than the minimum amount due. This allows you to reduce the actual debt amount faster. Minimum payments are designed to cover basic markup costs. The reduction in outstanding principal amount is negligible. To ensure that your debt is reduced, repayments should be higher than the minimum amount due. Another procedure to reduce the principal amount on your credit card would be to make frequent small payments between billing cycles. Since the markup is applied on outstanding principal amounts, the markup cost is reduced with such payments.

We, at MyBankersOnline, believe that sensible usage of credit cards can ensure a debt and stress-free budget for an individual. If you are able to effectively manage your expenditure and repayments on your credit card, you will never be a victim of the vicious debt cycle!


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