This document provides information on responsible credit card usage. It discusses how credit cards can help build credit scores and earn rewards if used properly, but can be dangerous if misused due to high interest rates and fees. These include annual fees, interest charges if balances aren't paid off monthly, penalties for late payments or exceeding the credit limit, and additional fees for cash withdrawals, foreign transactions, and only making minimum payments. The document advises using no more than 30% of the credit limit, paying balances in full each month, tracking spending, and being aware of marketing tactics to use cards responsibly.

1. CREDIT CARD
Use your
2
RESPONSIBLY
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2. CREDIT CARDS
ARE A PARADOX.
If you don’t know how to use credit cards
responsibly, it can be dangerous.
But if you’re smart about credit cards, they
can help you improve:
C O M P A N Y . C O M
your credit score
earn reward points
manage your short-term borrowings, etc.
Avoid the need of carrying cash
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3. CREDIT SCORE
Credit score shows the
creditworthiness of a person
and is the determining factor
for the approval of a loan or
credit card application.
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4. YOUR LOAN
APPROVAL DEPENDS
ON YOUR CREDIT
SCORE.
Figures on the right shows the relationship between
CIBIL score and percentage of new loans approved.
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5. KNOW YOUR
CREDIT CARD
ANNUAL FEES
You're offered a "FREE" card
Fee waived off for lifetime or the
first year?
Joining and annual maintenance
fees
After first year, fees can be a
minimum of Rs. 200 and higher
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6. KNOW YOUR
CREDIT CARD
INTEREST CHARGES
If outstanding bill is not paid within
due date
Monthly interest rate of 2 to 4
percent only
What is hidden is this rate is
annualized (24-48%)
Understand APR (Annualized
Percentage Rate)
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7. KNOW YOUR
CREDIT CARD
MINIMUM PAYMENT TRAP
Lured to pay only the minimum due
amount
Generally, 2 to 5 percent of total
outstanding amount
On a bill of Rs. 25,000 and an APR of
36%, if you only make the minimum
payments, it would take around 20 years
and Rs. 62,000 to payoff the total debt.
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8. KNOW YOUR
CREDIT CARD
LATE PAYMENT CHARGES
Hefty penalty charges for not paying
within due date
Fee can be either fixed or depend
upon the outstanding amount
Fee amount can be Rs. 500 or higher
Late payment will affect credit score
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9. KNOW YOUR
CREDIT CARD
CASH WITHDRAWAL
Withdrawing cash from ATM has
both interest charges and a fee
Interest is charged from day 1
Fee is typically Rs. 300 fixed or 2.5
percent whichever is higher
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10. KNOW YOUR
CREDIT CARD
CROSSING THE LIMIT
Exceeding the credit limit has
charges
Even if you exceed by just 1 rupee
Fee is typically Rs. 500 fixed or 2.5
percent whichever is higher
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11. KNOW YOUR
CREDIT CARD
FOREIGN TRANSACTIONS
Buying something in Dollar or Euro
would cost you extra
Transaction is converted to INR
Transaction charge is typically 3.5
percent
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12. HOW TO USE
YOUR CREDIT
CARD
RESPONSIBLY?
The 30% credit utilization rule.
Not using a credit card can be
as bad as overusing.
Pay off your balance in full
before due date.
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13. HOW TO USE
YOUR CREDIT
CARD
RESPONSIBLY?
Pay off your balance in full
before due date.
Track your discretionary
spending.
Get fraud and purchase
protection.
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14. HOW TO USE
YOUR CREDIT
CARD
RESPONSIBLY?
Regularly check your account
activity online.
Be aware of the marketing
gimmicks.
Feel secure with access to an
emergency line of credit.
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