6 Common Credit Card Mistakes to Avoid
Having a credit card makes your life easier as it enables you to pay for your purchases later. But the amount of convenience you enjoy does not come free.
Banks try to lure customers, especially salaried professionals with various schemes and offers. Using your credit card responsibly may bring you a lot of benefits including building your credit score to a level which is considered healthy. But a single mishap from your part could wreak a havoc on your financial health. We have put together some of the common mistakes that a credit cardholder commits unintentionally.
Read on to know if you have been committing these mistakes.
Overlooking your Monthly Statement
The credit card companies usually send the monthly statement of your bill. Hundreds of spam emails may litter your inbox and you might tend to ignore the statement sent by the company. The outcome of not minding your bill could cost you a lot. There could be additional charges and interests being billed by the lender without your knowledge. Keeping a tab on your monthly statement and looking for the fine print while understanding the terms and conditions will help you monitor your spending.
Paying the Minimum Due Amount
Some credit cardholders pay off only the minimum due in order to avoid the late payment. The rest of the month will be carried forward to the next month. This may not affect your credit score immediately but will pile up additional interest on the amount not paid. Paying off the entire amount will save you a lot of money.
Applying for Multiple Cards
Luring schemes like the free credit card, reward points, and bonus miles might seem enticing. Having more than one card will be more convenient. But it leads to several other complications like maintenance problem, misplacement, trackability issues. Moreover, multiple credit cards will make you look like a risky candidate for loan eligibility.
Exceeding Your Credit Limit
Spending more than your available credit limit will hurt your credit score very badly. Maintain a balance on your credit limit as credit utilisation is a major factor the credit score.
Withdrawing Money from ATM
Using your credit card to withdraw money from the ATMs will accumulate additional fee and interest. This habit could become quite addictive and cost you enormously.
Incorrect Closure of Credit Card Account
Your credit card usage is recorded in your credit report and this credit report would get affected if you do close your old credit card accounts incorrectly i.e. not checking for incorrect account information that has appeared on your credit report or non-payment of past dues.
To err is human, but humans have the capacity to take course correction, if you have committed any of the above-said mistakes, it is the right time to undo it.
The first action in the direction would be to look at your credit score and credit report on the CreditMantri website.