10 Common Credit Card Mistakes: There was a time when only a few people had credit cards. But in today’s era, the use of credit cards has become very common. Different people use credit cards according to their needs. Many people use credit cards to buy things on EMI.
So many people use credit cards for online shopping. Some people use it for rewards on special products. But during this time many people make small mistakes. About which they are not even aware. Today we will tell you about 10 such mistakes which people generally do not know.
1. Withdraw cash from credit card
Often when people need cash in an emergency and they do not have money in their account, they withdraw money using their credit cards. This is a very common mistake. People get their work done with cash at that time, but they do not remember how much interest they will have to pay on cash withdrawal from credit card.
You have to pay more interest on cash withdrawal than on things you buy using credit card. That is why at such times, if you want, you can borrow money from a friend or relative. But avoid withdrawing cash from credit card.
2. Using a credit card for everyday things
When people have a credit card, they buy everything using the credit card. In such a situation, money is not deducted from their account. But the burden on the credit card keeps increasing. And gradually you end up spending more in this process. You don’t even know how much money you will have to pay later. That is why when you buy small things, buy them in cash or buy them using a debit card.
3. Making unnecessary purchases even when money is low
According to Adil Shetty, CEO of Paisabazaar, often when people do not have money, they still keep buying things with credit cards. Which proves to be a good option. But it increases your liability a lot in the future. And then when it comes to paying the credit card bill, then you have to face a lot of difficulty. That is why avoid buying unnecessary things with credit cards.
4. Not setting up alerts
When you make a lot of payments, it becomes very difficult to track all your payments. You do not even know when and which payment you made. Nowadays banking facilities have changed a lot. You are given the option to set an alert. In which you can set upcoming payment reminder. You can set bill payment alert. You can set alert on spending limit. This makes it very easy for you to use credit card.
5. Cancelling the old card
Many people close their old credit cards when they get a new one. This reduces your spend limit but increases your spending ratio. For example, if you had two cards, you would spend a thousand rupees from both. But if you had only one card, you would have to spend Rs 2000 from only one. That is why closing the old credit card affects your credit score. You may spend less but keep the card active.
6. Spending more than before taking a loan
When you go to take a loan, the loan giving banks and companies look at your credit history. In which they look at your existing loans and high transactions done on your credit card. If you have already done very big transactions on your credit card. Then it is very difficult for you to get loan approval. That is why do not do any big transaction on credit card before applying for a loan.
7. Paying medical bills with a credit card
When a person falls ill and spends a lot of money on treatment, he chooses the option of paying through credit card. Which seems right at that time because one does not have to pay from the pocket. But after paying the medical bill through credit card, a credit card bill is generated.
If you do not pay it on time, then extra charges are levied on you. This can cause you loss. That is why it is better to take medical insurance instead of paying medical bills through credit card. This will save you from unnecessary expenses.
8. Balance transfer without knowing the repayment strategy
People get the option of balance transfer on credit cards, which means if you have spent money from this credit card, you can pay its bill from another credit card. But sometimes you do not have to pay separate money for this. At the same time, sometimes you have to pay interest separately and also pay the charge of the credit card to which you are transferring the balance. When you transfer the balance without knowing, you increase the burden of debt on yourself.
9. Not updating contact details
Many times people shift their house. But they do not change their address in the bank. They are unable to get the documents sent by the bank. This includes the credit card statement as well. So many times credit cards are also included. That is why when you change your house or change any details. Make sure to change it in the bank as well. So that your information does not fall into the wrong hands. And you do not miss any payment or banking related thing.
10. Not reading the fine details properly
Whenever you take a credit card from a bank, you are given documents along with it. These contain many conditions regarding the use of the credit card, information about the interest rate, credit card fees, and penalty for not paying on time and many other things are also written.
Many people start using credit cards without reading these minute details. Which sometimes puts them in trouble. Always read and understand these things and only then use the credit card.
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