Credit Card Mistakes You Shouldn't Make
Credit cards can save you a lot of money if you use them properly. If you have a good credit card, you can get various benefits and gifts. Different stores also offer separate discounts for credit cards of different banks. A credit card can also help increase your acceptance of a loan from a bank. But it's not that there are no risks in using credit cards, credit cards can become your headache. So it is important to keep in mind some things while using credit card.
If you are late paying your credit card bill, you may incur additional fees and interest that can increase your costs. In today's inflationary and economic climate, these extra costs can leave you in a lot of trouble. From today's post, you will learn about the biggest mistakes in using credit cards and get an idea on how to use credit cards easily and correctly. So if you are a credit card user, you need to be well aware of these issues.
Paying Credit Card Bills Late
This is the biggest mistake when it comes to using credit cards. Always avoid paying late credit card payments or outstanding bills. Common credit card users make this mistake the most. As a result, most users end up racking up more credit card bills and overspending. As a result, your acceptance to get various bank loans gradually decreases. Late credit card bill payments can easily get you into debt.
So to avoid these late bills you can set monthly reminders so that you can pay at least the minimum payment on time. Most banks also allow you to deduct the auto payment every month so you never have to worry about it. Many banks give extra days to repay the loan without any fee. But most banks will charge you as soon as the bill payment period ends. Also, if you regularly pay your credit card bills on time and forget to pay them late in a month, you can call your bank and talk about it. Some banks give one time chance for such mistakes.
Using the Full Credit Card Limit
Depending on your income, banks set limits on how much you can spend on credit cards. The second credit card mistake is overspending the credit card. This will make it difficult for you to repay and can trap you with additional bills. It's best to always stay within 30 percent of your credit card limit. For example, if your credit card limit is Tk 5 lakh, you should not spend more than Tk 150,000. Best if you can keep your expenses within 10 percent. That is, 50 thousand taka or less is the most convenient.
The more you spend over your credit card limit, the more at risk you are. The higher the outstanding balance on your card or the amount you owe the bank, the more interest you will pay. This can make it very difficult for you to repay the loan.
Always Pay the Lowest installment
Your bank requires a minimum down payment on your credit card expenses, which you can avoid incurring additional fees and interest by paying. This minimum portion is determined according to your credit card balance. But you could be making a big mistake by always paying only this minimum bill.
By making repeated minimum payments, your interest rate and loan amount will increase and eventually you may end up in a big debt trap. Therefore, the bill should always be paid in full. However, if that is not possible in any one month, you can save yourself from additional expenses by paying the minimum bill. But it is not right to make it a habit.
So you should pay your card bill in full. If that's not possible, you should stop using the card for a while until you can pay it off in full. This way you can avoid the burden of debt.
Direct Cash Withdrawal From Credit Card
It is a big mistake to buy anything with cash or cash directly from a credit card. It is the cheapest way to pay for anything. Therefore, withdrawing money from credit cards using ATMs should be avoided.
Generally, if you withdraw money in this way, the amount of interest is much higher than usual. Also, many cards have separate transaction fees. So the cost of withdrawing money in this method is very high. So it is wise to pay directly by credit card when purchasing any product.
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Credit Card Cancellation
Closing credit cards all together is a mistake. This can cause problems in the future when you get a new credit card or increase your limit. Credit cards should always be taken on a case-by-case basis and should only be closed after paying off all debts.
If you must close a credit card, pay all bills and close. Always use the card with the highest limit and the old card. If you want, close the card with low limit. This will have less impact on your credit history.
Applying for Additional Credit Cards
It is never okay to apply for more credit cards. This makes it difficult for you to keep track of and account for card usage. Always apply for credit cards as needed. Applying for additional credit cards can significantly increase your costs. So it is better to use a basic credit card.
Not Checking Billing Statements Regularly
You should check your credit card billing statement regularly. Because in this you will get an idea about your expenses and understand in which sector you are spending more.
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Spending should be done accordingly by looking at the credit card usage statement where savings will be made. By doing this, you will be able to avoid additional costs and also take quick action in case of wrong charges on your card. So keep track of your expenses by checking your billing statement every month.
