Credit cards: Using credit cards properly can help you get a financial boost, but if you make some common mistakes, you may face a financial crisis. Here are 5 such mistakes that can prevent you from taking full advantage of your credit card: 1. Paying just the minimum amount: Paying just the minimum amount will keep your interest rate up, and your debt can spiral out of control. Always try to pay the entire bill on time.
2. Late payments: Failure to make payments on time can result in late charges, as well as affecting your CIBIL score.
3. Use only 30-40% of your credit limit. This will keep your credit score good. Using more than the limit can lead to a lower score.
4. Cash transactions: Cash transactions from credit cards cost more as they carry higher interest rates and a higher rate of return.
5. Misusing multiple cards: If you have more than one credit card, understand their bills properly. Multiple cards can be misused at the same time, resulting in repayment errors.
By avoiding these instances, you can use your credit card wisely and stay away from financial messes.
Despite the allure of using credit cards for financial management, there are a few additional factors to take into account. 6. Take advantage of interest-free periods: The credit industry offers interest-free periods, which are typically 45-50 days. Paying your bills in full within this time frame will save you from paying interest.
7. Use rewards and cashback: These days, credit cards offer many rewards, points, and cashbacks. They can be used for used automobiles, shopping, and stores. So, accept your card’s rewards system and claim their benefits.
8. Pay attention to annual fees: Some credit cards have annual or mortgage fees. When you’re choosing a new card, pay attention to these charges and see if the benefits outweigh them.
9. Accept EMI conversion: Many times, credit card holders have the option of paying large expenses in EMI. While this may seem like a good option, it’s important to remember that EMI also carries interest, so make sure to use it only after thoroughly understanding the loan terms.
10. Use without hesitation: Online fraud is on the rise. Only use your card on secure websites. Never share the card or information with anyone else. If you see a suspicious card, check your account immediately.
