For security reasons, none of the credit cards come to you in an active mode. You need to call the bank/toll free number for activation.

A credit card is, beyond doubt, a double-edged sword in your pocket or purse. If used well, it can be one of the most rewarding credit options available to a consumer but if not; it could push you towards a vicious debt trap. Here’re five things you ought to know before that proverbial first swipe:

A for Activation

For security reasons, none of the credit cards come to you in an active mode. You need to call the bank/toll free number for activation. In most cases, you will need to enter your card number and answer KYC questions. Make sure you make the call for activation from a registered phone number.

Interest Matters

It’s absolutely essential to be aware of interest rates to avoid scripting the disastrous stories of reckless credit card use that has spelt doom for scores of gullible consumers across the globe. First and foremost, examine the standard rate of interest, which is determined by annual percentage rate. This is the rate at which you will typically pay your outstanding dues. Further, this rate gets divided by 365 days and is applied to your outstanding on daily basis. Carefully read the terms and conditions mentioned in the literature dispatched with your credit card. They reveal valuable information on how to how to avoid recurring interest on your charges when you make payments in part or full.

Love Your Limits

The credit card issuer sets your credit limit based on factors including your income, repayment history, spending patterns and CIBIL score. This is the maximum amount one can spend on the given card. Usage beyond this limit will invite penalty.

Reap Rich Rewards

Every credit card launches its exclusive reward programs. Some start rewarding you outright with the first swipe for purchase while others ask for registration to become eligible for earning rewards. A few cards fetch you rewards only on certain transactions. Study the details of your reward program and use your card accordingly to get the most out of it.

It pays to Autopay

If you are forgetful by nature, use the autopay option for managing your balance outstanding dues, i.e. set up the date and minimum amount due towards outstanding. Ensure that you choose the right date to avoid late charges. This can be done either through the credit card issuer or your personal bank. Remember, paying your dues on time will boost your CIBIL score implying higher market credibility.

Once you are familiar with the key aspects mentioned above, you would feel more confident about using your credit card in a safe, secure and rewarding manner. Here’s wishing you countless swipes that are responsible and rewarding in the same breath.  

The author is Co-Founder & Director, CreditVidya.