8 Most Common Credit Card Mistakes To Avoidby Card Insider Personal Finance Advisor
Credit Cards have always been the talk of the town mainly due to all the ancillary benefits and special perks it offers. Credit cards are certainly great tools to achieve your financial goals. That is why people often tend to act carelessly whenever using a credit card and end up in unfavorable situations. In this article, we have provided some ways in which you avoid such mistakes from happening. Check out the steps stated below to know more
Paying the Minimum Amount Due
So, as you already know that paying the minimum amount due helps to avoid default or missed payment and you are not being charged a late payment fee. But what you don’t know is if you keep on making the minimum due amount on your credit card bill it’s going to kill you soon. This reason is paying the minimum amount due doesn’t mean you are not being charged with an interest on the unpaid portion.
Ignoring Your Monthly Statement
Another common mistake that people often make is they neglect their monthly statements. The monthly statement helps you with detailed information about your credit card. You will have a clear view of your credit card account transactions. Reviewing your credit card statement shall only help you review and recognize any authorized transactions if any. Hence, it is important to review your credit card monthly statements.
Making a cash advance creates an additional charge for the customers as you get charged with a cash advance fee on your withdrawal amount. Not only this but also you get charged with an interest on the cash withdrawal amount without any grace period. Therefore, you end up paying a separate interest for cash withdrawals along with the regular interest charged on purchases using the credit card.
Not Utilising Your Reward Points Wisely
One of the most common mistakes that people make is not using their reward points strategically. Reward points are basically special incentives and perks banks offer to their customers depending on their spending. It is really important to make the most out of these rewards as they tend to expire after a while. Let us say, for instance, you are getting 5% cashback on a flight booking using your credit card. In such a case, it may benefit from booking your flight tickets using a credit card. The important thing here is to use your credit card wisely.
Exceeding the Credit Card Limit
Bank set a fixed limit on a credit card and you are recommended to not spend beyond that limit. If you spend beyond that stated limit assigned by the bank then you will be charged with an over-limit fee. Besides that, it also affects your credit utilization ratio that may reflect on your credit report adversely. Hence, avoid maxing out on your credit card
Not Comparing Credit Cards
It is important to do the necessary research before applying for a credit card to get the best deal for yourself. Comparing credit cards will only help you find the right credit card that suits your need and requirements. There are a lot of things such as annual fee, interest charge, rewards, and benefits are some of the crucial factors you need to look into whenever comparing between the cards. To know which credit card is the right fit, you need to compare credit cards in India.
Applying For Too Many Credit Cards
One common mistake that people often tend to make is that they make too many applications. It is highly recommended to not make too many applications in a short span of time. Generally, when you apply for a credit card the bank goes through your credit report. Under any circumstances, the bank rejects your credit card application then it shall reflect on the credit report and will affect it adversely.
Using Credit Card For Your Daily Purchases
If you use a credit card to meet your day-to-day expenses then you need to stop right now. When you pay for your credit card to pay for your daily needs then you create a charge on yourself. Soon, these charges would exceed your day-to-day expenses and which may lead to a debt trap.
To summarize, it requires a little cautiousness and diligence to use a credit card. The problem arises when we are unfamiliar with how our credit card operates and the benefits it provides. With the right knowledge and a certain level of awareness, these mistakes can be avoided. Identifying potential issues ahead of time may also assist you to avoid making blunders. The little nuggets of information stated above will help do that.
Created on Oct 30th 2021 06:58. Viewed 647 times.