Stop Making These 10 Common Credit Card Mistakes Right Now

Credit cards can be valuable tools for building credit and providing consumer-friendly rewards such as cash back, travel perks, points, statement credits, and more. However, to make the most of your credit card usage, it's crucial to understand and avoid common mistakes. This ensures responsible spending, timely bill payments, prevention of misuse, and maximization of the benefits offered by your cards.

So, if you are amongst those who turn a blind eye towards credit cards’ benefits and prefer to instead believe the negativity around them, then in all likelihood, you are at fault. Wondering how? Let’s walk you through some of the biggest credit card blunders that harm your financial health in multiple ways.

Struggling with your credit card payments?

If you often miss your credit card payment deadlines, it's time to take action. As a credit card user, it's crucial to remember your bill's due date. If you miss it, you could face late payment fees and hefty finance charges from the credit card company. To avoid this, consider using auto debit or setting reminders through apps. This ensures you stay on top of your payments and avoid unnecessary charges.

Only paying the minimum amount due?

Paying just the minimum amount due on your credit card bill can lead to trouble. While it may help you avoid late payment charges, hefty finance charges will still apply to the unpaid balance. This can quickly spiral into debt, damaging your credit score and potentially leading to additional fees. Instead, aim to pay off your balance in full each month to avoid accumulating debt and maintain a healthy credit score.

Withdrawing cash from your credit card?

Withdrawing cash from your credit card may seem convenient, but it can be costly. Not only will you incur cash advance fees, but you'll also face high finance charges from the day of withdrawal until you pay off the amount in full. This can quickly add up and lead to financial trouble. It's best to avoid cash withdrawals and use your credit card for purchases only.

Using a high percentage of your credit limit?

Using a large portion of your credit limit can negatively impact your credit score. Lenders may view you as credit hungry, increasing the risk of default. Aim to keep your credit utilization ratio below 30% to maintain a healthy credit score. This shows lenders that you can responsibly manage your credit and reduces the risk of default.

Not taking advantage of credit limit increases?

Credit limit increases can offer several benefits, including increased financial flexibility and improved credit utilization ratios. If you're offered a credit limit increase, consider accepting it, especially if you're able to manage your finances responsibly. This can provide you with additional room to handle unexpected expenses and improve your credit score over time.

Applying for multiple credit cards at once?

Applying for multiple credit cards within a short period can harm your credit score. Each application results in a hard inquiry on your credit report, which can lower your score. Instead, space out your applications and research each card's features and eligibility requirements before applying.

Using 'no cost' EMI schemes without understanding the costs?

'No cost' EMI schemes may seem appealing, but they often hide hidden costs. Interest charges are typically built into these schemes, and you may also incur GST and processing fees. Before opting for a 'no cost' EMI, carefully consider the total cost and whether it's worth it in the long run.

Ignoring the interest-free period?

Many credit card users overlook the interest-free period, which can save you money on interest charges. By making purchases earlier in your billing cycle, you'll have more time to repay them before interest accrues. Take advantage of this feature to minimize interest charges and maximize your savings.

Not considering pre-approved credit card loans?

Pre-approved credit card loans can provide quick access to funds during emergencies. If you're eligible for a pre-approved loan, consider taking advantage of it instead of applying for other forms of credit. This can help you avoid unnecessary paperwork and expedite the loan approval process.

Letting reward points expire?

Don't let your hard-earned reward points go to waste! Keep track of your reward points' expiration dates and redeem them before they expire. Whether it's for travel, gift vouchers, or bill payments, make sure to use your reward points before they expire to maximize their value.

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