Credit cards are a better way of paying for financial transactions. They let you conduct your transactions on credit and pay for them late...
Credit cards are a better way of paying for financial transactions. They let you conduct your transactions on credit and pay for them later on. Moreover, the cards offer reward points on each transaction done using them. These points accumulate and promise you attractive gifts and privileges. Besides reward points,Hdfc credit cards also allow you other benefits. As such, many of you prefer transacting with credit cards rather than cash. However, though credit cards are beneficial, if you don’t use them wisely, they can turn into a nightmare.
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| Mistakes you are making with your Credit Cards |
Many of you don’t know how to use the card efficiently and make grave mistakes which ultimately cost you dearly. Here are examples of some common mistakes you make with your credit cards which you should avoid at all costs –
● Revolving credit
Your credit card allows you to pay the minimum amount due (MAD) on your bill and carry forward the outstanding balance to the next month. This is called revolving credit facility. While the facility looks good, you should avoid it at all costs because you attract heavy interest payments on the amount carried forward.
● Choosing a wrong card
Credit cards come in multiple variants and each variant is designed for a specific use. Travel cards are meant primarily for travel bookings while lifestyle cards are primarily designed for lifestyle spends. If you use the card for its designated use, you earn higher reward points. That is why choosing the right card is important. If you choose a wrong card you cannot earn the maximum benefits.
● Not knowing and utilising the benefits provided by your card
Credit cards allow you various privileges besides reward points. You might get dining discounts, free movie vouchers, free air tickets, discounts at merchant outlets, cashbacks, free memberships, etc. If you don’t know or utilise the benefits provided by your card, you lose out on extra privileges which you could enjoy for free.
● Withdrawing cash from ATMs
Credit cards allow cash withdrawals from ATMs when you are short on cash. However, doing so is a big mistake. If you withdraw cash you would be charged high interest rates till you pay off the withdrawn amount. For cash withdrawals, your debit card is the best bet.
● Utilising high credits
You get a credit limit on your card. Against this limit, the credit you use determines your credit utilisation ratio. A high ratio has a bad impact on your credit score and should be avoided. Even though your card allows you a high limit try and use as little as possible. It would be easier to pay off and your credit score would also improve.
● Closing an old card unnecessarily
When you close an existing credit card you lower the credit limit allowed to you. If your credit usage remains the same, the credit utilisation ratio increases. As the ratio increases your credit score falls. So, if there is no valid reason, don’t close your credit card. It would help maintain your score by keeping the credit utilisation ratio low.
Doing these mistakes on the credit card has bad consequences. You should, therefore, avoid them at all costs.
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