The use of Credit cards has given us a lot of financial freedom. Credit cards give you benefits like cashless transaction, rewards, building a credit score, discounted price on shopping etc. All those benefits of a credit card can be enjoyed as long as you use it sensibly. But the point to consider that the day you become less attentive about the usage of your credit card, it may come haunting you. Many a time credit card users commit mistakes which made them pay for it.  Some of those mistakes are committed by the users as they are less aware of the same.

Bad Credit Card Habits Which are Worth Quitting

Why Should You Pay Your Credit Card Bills Before Due Date?

Paying the Minimum on Your Credit Card

Every time you owe some amount to the card provider, they provide you with a minimum payment amount. The minimum payment amount is generally just 2% of the total payable. If you pay only the minimum payment amount, you are simply making the card provider getting more and more profit. The card providers ever want you to carry the debt so that more interest can be earned. By paying the minimum amount, you pay only a part of the interest and your credit utilisation increases every month. This creates a negative impact on your credit score as well as the debt will become a never-ending process.

Looking for Reward Points Ever

There are a number of credit cards available in the market which give reward points for almost all purchases. But if we flip the coin, we will find that the merchandise who are the partners of your credit card will do their best to make you shop more and more. Many a time shoppers are found to buy those items which were not necessary but came with a high reward point. The high reward points are actually the marketing gimmicks from which you are to keep yourself safe. The shopping should be done based on necessity, not on advertising.

How can I Make My Credit Card a Helpful One?

Missing Payments

Ignoring the credit card payments are one of the biggest mistakes of a credit card user. Many a time people miss or delay the credit card payments which can cause various harms such as paying penalty, spoiling credit score, getting the unpleasant payment reminder calls etc. If you delay payment for two to four days, you will have to pay the late fee. If you miss the payment for a month, it will be reflected in your credit report along with paying hefty late payment penalty.

Using Cash Advances

Your credit card gives you an advantage of accessing cash during an emergency. With the help of a credit card, one can withdraw money from ATMs anytime. But the lesser known fact is that unlike a credit card purchase where the interest starts accumulating after one month, here the interest has been charged as soon as you withdraw money. The interest on the cash advance keeps on accumulating without any grace period. Moreover, the interest rate is much higher than the credit card purchase with the same card. Hence, taking a cash advance should be avoided if possible.

Credit Score and Its Impact On Loans

Overspending

Credit cards give you the freedom to survive even when your bank account dries up. A credit card helps you to make big purchases. But if you use a credit card more than you can pay back, it can turn to be a disaster to you. The ideal expenditure on a credit card should be not more than 50% of the total available balance. Spending more money can make it difficult to pay it off. Your credit card expenses should be done according to your income.

Applying for Unnecessary New Credit Cards

If you are earning well and your credit score is good, there will be many credit card providers who will be ready to provide you with credit cards with attractive benefits. Having more than one credit card may tempt you to spend more as you have a higher balance in credit cards to use. In this way, there are high chances of overspending on credit cards. On the other hand, if you avail a new credit card and keep it without using, it is also a loss for you as you are to pay the annual charges of the credit card. Above all, applying for too many credit cards can score down your credit score too.

Facts about CIBIL Score No one will Tell You

Losing Track of Rewards Points

One of the main reasons for using a credit card is the reward points. But many cardholders are found to neglect reward points. They neither monitor reward points nor do they redeem it. Not redeeming reward points may let many of the advantages slip off your hands. As we mentioned above, thinking only about reward points is not a good habit so as neglecting the reward points.