How to prove that you are responsible as a credit card user

February 20, 2022, 11:20 a.m.

Last modification: February 20, 2022, 6:57 p.m.

Minhaz Uddin, Vice President, Head of Cards and Personal Loans at Lankabangla Finance Ltd. TBS Sketch


Minhaz Uddin, Vice President, Head of Cards and Personal Loans at Lankabangla Finance Ltd. TBS Sketch

A credit card can be a powerful tool for your personal finances because it lets you use money that doesn’t belong in your wallet or bank account.

If used responsibly, credit cards give you monthly loans at no cost and allow you to make better use of your own money.

It would be really great if the story could be limited to just this, when it is not in real life for many, because irresponsible financial behavior regarding the use of cards often damages their personal finances.

However, like any tool, your credit card can be harmful if not used wisely.

If you don’t know how to use a credit card yet, it’s wise to learn a thing or two before opening this type of account.

Credit cards are financial tools and should not be viewed as inherently good or bad.

Instead, it is up to the cardholder to determine how their cards will be used.

If you use your credit cards as a safe and convenient method of payment, while building your credit history and enjoying valuable cardholder benefits, including discounts on a wide range of products, interest-free installments on purchases, then credit cards can certainly be good for your personal finances.

The first goal of responsible credit card use is to minimize — or avoid altogether — interest charges. These interest rates are imposed on your average daily credit card balance and can result in extremely expensive charges over time.

Fortunately, you can use a credit card without paying interest charges to your financial institution. The key to avoiding interest is to pay your statement balances in full and on time, each month.

When you do this, you will be able to use your credit card with no monthly fees. In this scenario, you essentially receive an interest-free loan each month, courtesy of your credit card issuer.

In addition to avoiding interest charges and debt, paying your bills on time is extremely important for responsible credit card use.

When you open a credit card account, you agree to make at least the minimum payment by your statement due date. Another important function of your credit card is to help you build up credit.

By making your payments on time and minimizing your debt, you will add to your positive credit history and increase your credit score.

Conversely, missing payments and accumulating debt will lead to negative information on your credit report and a lower credit score.

But the good news is that your score will increase quickly as you pay off existing balances. Avoid leaving your card in your car or in an unsecured place where you work.

And never lend your card to a friend. When using your card at an automated terminal, such as a mall, ATM, or vending machine, always be on the lookout for skimmers.

Skimmers are counterfeit devices added to machines.

Another aspect of responsible credit card use is protecting the security of your card so you don’t fall victim to fraud.

A skimmer’s goal is to capture your credit card information in order to use it to make fraudulent purchases. If something doesn’t look right, don’t swipe or insert your credit card and let the merchant know there may be a problem.

In reality, however, credit cards will never be as good – or as bad – as they are used.

Like many products, they are a tool that can be used to either hurt you or help you.

However, by understanding how credit cards work and how you can best use them, it may be easier than you think to use credit cards wisely.

Md Minhaz Uddin, Vice President, Head of Cards and Personal Loans at LankaBangla Finance Limited