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Using credit card do not make these 7 mistake
The use of credit cards (CC) has increased in the last some few years. According to the Reserve Bank of India (RBI), there were more than 4.2 crore active credit card accounts in the country as of August 2018. As of October 2016, their number was only 2.7 crore. These figures show the change in people’s preferences. However, new credit card (CC) users usually make mistakes while using them. Here we are going to tell about seven mistakes which should be avoided in any case to protect your card, privacy, CIBIL etc.
Mistake #1: Sharing card details (Avoid to share credit details)
Avoid to share credit details to any person it is the biggest mistake is sharing the card details with anyone. Often thugs get this information out of you by posing as a representative of the card company. Banks and credit card companies never ask you to provide such details. If anyone asks to do so then surely he is a fraud. Care must be taken while using the card at merchant outlets, especially at petrol pumps. Here there is a possibility of your card being skimmed (copy). This can lead to misuse of the card.
Loophole: Do not give your credit card PIN and other details to anyone. If the EDC machine is not visible, do not give the card.
Mistake #2 : Failure to pay on time (minimum charges must be paid on time)
Credit card companies do not like those who do not pay credit card bill on time. She keeps on sending emails and SMS reminding her to pay the dues. These alerts should not be ignored. Penalty and interest on the outstanding amount is levied for default in payment. What is worse is that the purchases made in the next month are not interest free. Credit score also suffers and must be effected. This reduces the chances of taking a loan in future.
Loophole : Instruct your bank to pay the card bill on the due date of every month. If there is a shortage of money, then at least the minimum charges must be paid on time so that there is no penalty.
Mistake #3: Paying Only the Minimum Dues ( Curb expenses )
Credit card (CC) companies want you to revolve credit so that they make sharp profits. If you deposit only the minimum amount due, then 2-4 per cent interest is charged on the unpaid amount. It sits at 24-48 per cent annually. This is a very expensive loan. Interest free period is not applicable in case of purchases if the card is outstanding.
The loophole: Curb expenses. Spend only what you can comfortably pay not to expend much more which you can’t pay.
Mistake #4: Withdrawing Cash ( Not to withdraw cash from credit card)
Credit card (CC) companies allow ATM withdrawals at a very high cost. There are fixed charges for any cash advance. An interest of 2-4 per cent per month is charged on withdrawal.
Loophole : Since it is very costly option. Therefore, withdrawing cash from credit cards should be avoided. Many small withdrawals should also be avoided. This increases the fixed charges. Always Avoid to withdraw the cash from ATM with credit card.
Mistake #5: Using the full limit (Do not use full limit of CC)
Credit cards give users the freedom to spend. Goods and services that once seemed out of reach are now accessible. However, if you use a large portion of the available credit card limit, your credit score may be get affected.
The loophole: Spend within the budget. Keep 2-3 cards instead of one card so that the limit is not exhausted.
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Mistake #6: Using to get reward points
Credit Card companies give you reward points on every purchase. With the help of this, they encourage you to spend. It doesn’t make sense to spend just to earn points. Nor should one wait too long to collect points. Reward points lose their value with the passage of time.
The loophole: Spend only according to the budget and need. Redeem reward points in 1-2 years. If the credit card company allows, then adjust these points in the payment of the bill.
Mistake #7 : Turning the card off frequently
Many times people close their card account. However, this is not a sensible thing. For example, if you have two cards with a limit of Rs 50,000-50,000. If you have spent Rs 30,000 in a month with these, then the credit utilization ratio will be 30 percent. If you close one card, the same ratio will jump to 60 per cent. High credit utilization ratio is bad for your credit score.
Loophole: Keep the cards active even if you are not using them. Keep extending the credit-free period by using 2-3 cards.
Note:– Avoid to use multiple credit card
Watch video to How to Apply credit card
