Important tips to use credit cards effectively

Credit card is a tool like any other financial tool which should be used responsibly. While it ensures cash flow, I don't advise customers to borrow for a longer period of time. It is meant for borrowing for short-term or limited period of time, says Citibank's business manager, cards, T.R. Ramachandran. Read on to understand the basics of credit cards. Q. Is it important to have a credit card? What are its benefits? You get 45 days to pay up the bill. Many companies also give rewards like airline miles, free fuel and retail discounts. Credit card is an important financial tool for those who need to take advantage of payment mechanisms like interest free period or short-term credit. Q. What do banks gain out of free credit of 45 days or lifetime free card where you don't charge any administration charges? Annual fee is waived off in some situations.

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