The number of people who use credit cards is on the rise. The credit card is loved by many citizens as it serves as quick money and comes to the rescue when you are running out of cash. But, not everyone who uses credit card is aware on its proper use. People who lack knowledge on how to use the credit card, either fall into the debt trap or lose money to fraudsters. So, in this blog, we will discuss the mistakes credit card users must avoid, to use credit card wisely.
You must always pay credit card bill on time. In case you miss paying your credit card bills on time, you will be charged a late payment penalty, as well as interest on the outstanding dues. The purchases you make in the following month will not be interest-free, and you will have to pay interest. So, make sure not to miss paying credit card dues on time. Banks and credit card companies send reminders regarding the last day for credit card bill payment. Not paying credit card bills on time impacts credit score. Having a bad credit score leads to multiple problems.
The biggest mistake credit card users make is sharing credit card details. There are many cases where people have lost lakhs of rupees by sharing their credit card details to fraudsters, who claim to be representing the bank or credit card company. One thing you must always keep in mind is banks or any reputed institutions never call asking for debit and credit card details. You must be very careful while swiping your card at any outlet or POS. Make sure the card is swiped only in your presence.
Minimum balance is the minimum amount you have to pay by the due date. This will be around 3% of the credit card outstanding dues. Many credit card users pay the minimum balance just to escape from the late payment charges. But, this will not save you from paying interest on the outstanding amount. Interest charged on the outstanding bill will be as high as 2-4% a month. This will be around 24-48% annually and makes it very expensive. There will be no interest-free period if there is an outstanding balance on your credit card. You will be charged interest on your purchases from the very next day.
Another mistake made by credit card users is withdrawing cash using the credit card. Every time you withdraw cash using your credit card, you will be charged cash advance fee which is as high as 2.5% of the amount withdrawn and this is subject to a minimum charge of Rs 300 to Rs 500. You will also be charged interest from the date of withdrawal, till the money is repaid in full. Interest charged will be around 2.5% to 4% a month.
Read More: Credit Card Mistakes To Avoid
The credit card has something called the credit limit. Credit limit is the limit till which you can spend using credit card. You must never exhaust your credit limit as it has a bad impact on credit score. Always try to keep credit utilization as low as possible.
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