This is a continuation of previous blog so please read it first for better understanding:-

How Credit Card Company Keep you in dark and keep on charging interest :-

As I mentioned in the previous blog , the major chunk of credit cards company 's income comes from the high interests they charge. So, to enhance their profits they come up with a deadly trap know as,

Minimum Amount Due:- 

So what is it ?

 It's a trap. What these companies do is that they say , suppose you have a bill of 1000rs, you could pay just 5-10% of it i.e. 100rs and can continue using your credit card. Most people don't know, as these companies never told them ,that they are being charged for the remaining 900rs.Not only that their Credit rating(term will be explained later) is also declining ..So, what people usually do?

They buy ,say a mobile for 1lakhs rupees, and pay 5k-10k say remaining they will pay next month.  But they don't realize that the remaining 90k is being charged a interest of 40%.

What is Credit Rating?

I used this term in my previous blog and I felt the need to explain it .

Do you think if you and The  Ratan Tata go to a bank for a loan , say to buy a property then both of you would be charged same interest , both would be asked to make same amount of down payment.

NO, exactly .. Why you ask because The Ratan Tata has a better credit rating than you .

How could you increase your credit rating ? 

Simply by paying interests and emi's of your loans on time and in a disciplined fashion . If possible pay in advance .

What Are the advantages of Credit Card?

You may be waiting for this question to be answered. But if I had answered it beforehand , I would feel bad as I would have failed to tell you that there are a lot of threat you must be wary of..

1. You get an interest-free period of 35-40 days to pay the amount back :- This is by far the biggest advantage and the only reason for the popularity of credit cards.. Can't you lend this money to some other person and charge a interest for it , or invest it in stock market and generate great interest .. obviously you can and generate a passive income.
2. Improve your Credit rating :- Pay your amount on time increase your rating .I don't think this point need further explaination
3. Use your points:- using credit card gives you points based on how much shopping you have done using it.. redeem them and go and watch a free movie or anything you want