Are you scared of using or owning credit cards ?

Many people are afraid of either owning a credit card or using one that they have. While it is healthy to be cautious, but it is also important to understand the benefits of Credit Cards and the advantages of using it vs other modes of digital payment methods. Let us try to overcome the myths and discuss facts so that you can weigh the benefits of using a credit card for yourself and maybe overcome the fear of using one.

Most common apprehensions behind not using a credit card can be eased by understanding the facts clearly. Most credit card troubles happen from how credit cards are used and are not inherent issues with credit cards themselves. Using cards with good sense and practice results in benefits for users like no fear of carrying cash, credit period of over 1 month on your spends, improvement in your credit score which is required for any kind of loan (be it housing, car or whatever else). In addition there are card benefits ranging from dining offers to complimentary airport lounge access to discounts on online and instore deals. All that can result in big savings for the user. You can also earn rewards points that are as valuable as cash. Besides that, using cards helps move towards a cashless economy.

Following are the top 6 reasons of that people are scared of using credit cards.

1. Fear of Credit Card Fraud

There are ways where thieves can gain access to credit card details and use it to make fraudulent purchases. But, if you as a user follow some basic good sense security practices you can avoid fraud. What are these? 1. Most online transactions through Credit Cards are safe guarded via One Time Passwords or OTPs. Never ever share these OTPs with anyone. 2. Never share your credit card CVV number (the 3 digit number at the back of the credit card) with anyone 3. Never share your credit card PIN with anyone or write it down in pieces of paper etc. 4. If you notice a transaction on your card that you have not done, report to the bank immediately. Most banks cover you for fraudulent transactions up to good amounts.

Moreover banks are continuously adopting better security technology to make usage safer. In short, frauds on Credit Cards are no worse than other digital payment methods prevalent today like wallets or UPI.

2. Fear of a Financial Trap Some users feel that credit cards are just a bank gimmick used to trap people into debt and keep them there. While credit cards are bank products but if you know the rules, you can avoid falling into any financial traps. All it requires is to maintain self-discipline and avoid racking up more debt than you can afford to repay in every cycle. Simple!

Also ensure that you are aware of your credit limit so that you don’t ever overshoot it. 3. Fear of Overspending or forgetting to repay on time We all know, if you eat just as much as your body needs you stay healthy but if you make a habit of over eating it results in bad health. The same truth applies to credt card spending as well! Too much debt is a result of personal spending decisions and is not inherent in credit cards. The tendency to overspend must be curbed, irrespective of whether you are spending by cash or credit card or any other digital payment method. That’s what is called personal fiscal discipline.

Every credit card has online presence nowadays. And almost all credit cards let you set different limits on your spends at outlets, online and international transactions. By setting these to amounts that you can manage well, you can enforce spending discipline. The card will simply not allow you to spend beyond your specified limits.

It is also important to note the date on which your credit card statement is generated every month and add a reminder on your phone to repay. That will ensure you don’t forget to repay on time. In addition to that, all cards send you SMS reminders when the statement is generated and indicate the balance to be repaid. So use this trigger to repay on time.

4. Fear of Hidden Fees These days central governing banks bodies (like RBI) have made sure that users are aware of fees associated with all financial products. So, when you buy the credit card you must know what these fees are and if any are recurring. For a normal user, there aren't many, except for yearly renewal fees and surcharge over fuel purchases (which most cards waive off). Other fees are to do with international transactions & cash withdrawal (which you should avoid unless it is an emergency).

Another simple fact that many users misunderstand frequently is that interest on credit card spends only accrues when the outstanding balance isn’t paid-in-full at the end of the spending cycle. And paying on time is in your hands!

5. No knowledge about credit score

If you don’t know what credit score is, then you should know about it because it determines your ability to repay on time and is used by banks to decide how much and whether to give you a loan or not. The loan could be a housing loan, a car loan or a personal loan. If you have built a good credit score, you stand a better chance to get approved for a larger loan and quickly. And the easiest way to build a good credit score is to use your credit card and repaying on time.

6. Fear of hurting your credit score This is an important one, and it really is in your hand. If you stay in a rented house and you don't pay house rent, you are likely to get called up by the owner. It is the same with credit cards as well. You are penalized for irresponsible spending behavior. Abusing your credit card, running up big balances and paying late fees can hurt your credit score. To keep a good credit score the rules are simple – maintain zero balance across cycles and pay on time every time. Simple as that.

Getting Over the Fear of Credit Cards

Delaying credit card use because you’re afraid of credit cards can prevent you from building a good credit score which is a must to get approved for loans. You will also lose out on benefits that directly map to savings. Learn the truth about popular credit card myths so you can learn to use credit in a way that benefits you.

RUSSH App is one such credit card user tool that allows you to benefit and save as it shows you ALL the BENEFITS on your cards. It is completely safe as it does not ask for card details ( - RUSSH Team

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