6 Common Credit Card Mistakes You Should Avoid

Despite their crumbling reputation, credit cards are a great financial tool! They are a boon that provide you with multiple benefits and advantages. Credit cards are a terrific alternative to cash and allow you to make purchases when your finances are in a pinch. You can also get additional perks like air miles points and cashback. Furthermore, if you manage these well and play your cards right, you won’t be wasting a single penny on interest. You will also be able to increase your credit score easily using these.  

However, we make some mistakes when we use this instrument without realising the possible consequences. Mismanagement of these cards can put a considerable strain on your finances. Let’s learn about some of these most common mistakes we make when using a credit card and how to avoid them! 

1. Paying the minimum balance

One of the biggest and most common mistakes consumers make is to not repay their credit card dues in full. You make expenses worth thousands of rupees and then find that you carry forward the credit to the next month by paying a minimal base value. Don’t be enticed to do so! Not paying your total bill can lead to heavy interest charges being levied on the borrowed amount. You might end up paying a ridiculous amount of interest for years to come.

You must pay off your bills on time and in full to safeguard yourself against such a scenario. If you cannot do so, ensure you pay back as much as you can each month to lower the piling heap of dues and interests. Carrying a balance can get risky and land you in debt. To avoid this, it is advisable for you to pay back all that you owe promptly!

2. Maxing out your cards

An important thing that most people forget when using a credit card is that the money you use is borrowed. Maxing out your credit card is not a wise decision as it can get you in a lot of trouble if you cannot repay the amount. Using your entire credit limit indicates that you are spending at a pace you cannot afford. It also puts you at constant risk of being charged with an overdraft fee.

This can have a negative impact your credit score, reducing your chances of getting a good loan in the future. The key to ensuring this does not happen is to utilise your card responsibly and cap your spending at 30% of the card limit provided to you.

3. Missing bill repayments

Making late payments is not the end of the world. However, these can have some severe repercussions on your finances. It is not just about the late fees and the repayment but if you keep delaying the payment for too long your credit score will also be impacted. This makes getting loans at good rates or a new credit card difficult. Your payments will always have a standard due date for a particular day of the month which rarely deviates. If you have trouble keeping the due date in mind, you can always set a reminder on your phone or mark the date on your calendar. Another easy solution to this problem is to set up an autopay function, where at least the minimum amount of your credit card bill is taken care of each month. However, you need to be careful that you always have sufficient balance in your bank account for this.

4. Getting the wrong card

Are you one of those who got tricked by the marvellous promises made in an advertisement? Before applying, did you not read the fine print properly? In this case, you might be at a loss. It is common for users to fall victim to creative ads and get a card impulsively. It is essential to get a card for the right reasons.

Spend some extra time comparing and analysing the various offers and cards available before applying for one. Do not apply for a card without understanding the offered promotional interest rates and the terms for collecting reward points. Reading the fine print of such financial instruments can be tedious, however equally important. This is because the true facts about your credit card are outlined here.

Applying for a card impulsively, even when you don’t need it can harm your credit score. Getting multiple cards at a time can lead to multiple ‘inquiries’ which can also lower your credit score. This further makes it difficult for you to get credit at good rates. Hence consider getting a new credit card only when you need it!

5. Not reviewing your statements regularly

Who has the time to read every minute detail in this fast-paced life? We glance through our credit card statements and make the payment. In this world where credit card frauds are common, it is necessary to ensure you are not cheated of your hard-earned money. It is also possible that perhaps your payments aren’t processed properly, or there has been some mistake when calculating your credit card bill.

It is important to check your statements regularly to make sure that all the applied charges and fees are valid, authorised, and correct. Ensure that the right amount is paid on your behalf and on time. This helps you save money and also protects you from damaging your credit score, in case you have fallen prey to identity theft.

6. Using cash advances

Taking out a cash advance is one of the biggest mistakes you can make when using a credit card. Withdrawing cash using a credit card attracts more interest than ongoing rates. Usually, they do not carry a grace period and charge an automatic fee on the advance amount withdrawn. Additionally, your credit card provider might not consider this advance paid off until the balance on your other purchases has been zeroed. Hence, it is best to avoid getting cash from your credit card unless truly urgent like a medical emergency.  

Using a credit card is not as complicated as it may seem. Just avoid these common mistakes and make the most of your card! Your credit card can help build your credit score and provide monetary support when required. A credit card is not a liability if you know how to manage it well! Are you ready to get your own credit card? Well then, come can choose a card from a wide range of providers on Bajaj Markets! With easy digitised process and amazing offers, apply for a credit card to get numerous benefits like cashback and discounts! Don’t hesitate. Get your own credit card now!