Credit card is our savior in terms of financial imbalance. But! Are you running out of money due to them? Does it find you difficult to pay the credit bills?
Here we will discuss a few things to deal with credit cards. Let’s read further to know what benefits credit cards provide and how you can avoid a few mistakes before you get a credit card.
There is a general principle of a credit card that you can buy right away and pay later.
credit card
Besides offering credit access instantly, the card also offers other privileges—reward points, cashback, discounts, etc. Using credit cards correctly can be a powerful financial asset for you. You don’t just boost the credit card scores but also avail various other benefits. However, many of the users mismanage the use of credit cards. They don’t realize the importance of credit cards and their impact on their finances. So let’s talk about the things that you have to avoid to pay the bills of credit cards easily. No matter you are applying for a new credit card or have already these tips will ensure a healthy financial being.
new credit card
Don’t Pay on the Deadline
Most of the credit card users feel that missing payments on their credit cards is actually not a big deal and thus they keep on procrastinating the payment. However, missing frequent payments can lead to heavy debt. Whenever you miss payments on a credit card, the interest on the particular credit card rises.
This interest ranges from 2% to 3.5% every month or even more. Further, the interest levied on a daily basis hikes day by day, which leads to piling debts. Therefore, it is always necessary to pay full credit bills on time. The credit card lenders evaluate the interest on the due amount. The formula for calculating the interest rate on the due amount is— the number of days from the purchase date till payment is made x the total outstanding amount x interest rate percentage per annum.
This is one of the most important points in avoiding credit card mistakes.
credit card mistakes
Just Paying the Minimum Due Amount
The issuers of credit cards make it easy to repay the balance by allowing the least payments.
Well! It is not advisable to just pay the least due amount. When you pay the least amount the balance revolves to the next cycle and this damages your finances further as late payment or mislead payment. This happens because there is interest on the unpaid balance and even if you pay the least amount, the interest will be charged on the left balance.
In addition, when you have an unpaid balance in your account and you make further purchases through the same credit card the interest will be charged from the very first day itself. Therefore, you should always pay the credit card dues on time. If somehow you cannot afford to pay the dues, you should try paying as much balance as you can. This is something that you should keep in mind before you apply for a credit card.
credit card.
Have Cash Advances and Spend on Unnecessary Things
When you take out cash in advance, this becomes one of the most important and expensive things that you do with your credit card. This might sound convenient but is not a wise way to get the cash at your disposal—in fact quite costly it is. Interest accrues on the account once you withdraw cash with it. Further, cash advances on credit cards, also impose an additional fee. Some banks impose a flat amount while a few charge on a percentage basis of the withdrawn amount.
For instance, if you have an HDFC account then the cash advance fee is 2.5% of the amount transacted. Therefore, knowing the cash advances, when the interest-free period is going to be void, and the cost that is borne on the new purchasing from the first day. This adds up to your debt significantly. Also, you will have to pay a one-time cash fee in advance which is charged as a percentage of the total withdrawn amount or even a flat maximum fee.
Not Keeping Up Credit Utilization Ratio
This will help you maintain a good credit score and credit availability during any emergency time. If you exceed the credit limit, try paying in cash for further expenses you make. If you break the limit, either request the card lender to further increase the limit of the credit card or apply for a new credit card to increase the whole credit card limit.
Not Picking a Right Credit Card
Many people make the mistake of getting a credit card without any knowledge. It is very common. For example you are not someone who frequently travels, then picking a card that is mainly for travel purposes is not a wise idea as it won’t be able to give you the benefits you wish for. In such cases, you won’t get any advantage of the card nor will be able to accomplish your requirements. If you are someone who is looking for cashback, then Axis Ace is a good choice.
If you are a frequent buyer, then Amazon Pay ICICI or Flipkart Axis is good to opt for. Thus, always analyze the spending paradigm before applying for a credit card and choose it wisely to fulfill your requirements. The best credit cards are the ones that do the needful with rewards and benefits to you, remember that!
Rundown
Hope this is going to be helpful in the future whenever you go for an online credit card issuing. Avoiding credit mistakes is crucial for financial stability. Late payments, excessive debt, and neglecting credit reports can harm your credit score and limit future opportunities. Make wise financial decisions to secure a healthy credit profile and open doors to better financial prospects.
