A credit card is a great option to pay for your expenses throughout the months. You can pay both online and offline using credit cards and make a single payment for all the credit you avail of at the end of the month. It can help you build a credit score over time which can help you take loans at lower interest rates in the future.
Even though credit cards allow you to avail yourself credit every month for your expenses, it does not mean that you should use them recklessly and get entangled in credit debt.
It is crucial to understand that misusing a credit card can damage your credit score and make you seem credit hungry. With this article, you can avoid the most common credit card mistakes that people make to avoid damaging your creditworthiness.
1. Making minimum partial repayments
Making a minimum payment can impact your credit score over time. It can make you fall into debt that might take you months or even years to repay. It is advisable to make full repayment each month to avoid heavy credit card interest rates.
2. Carrying a balance
Myth — carrying a balance improves your credit score. In contrast, it impacts your credit score negatively. Lower credit utilization is better if you are looking to improve your credit rating. Further, carrying a balance piles up unnecessary credit card interest charges.
3. Late payments or missing a payment
Not making a payment on time can make you look financially unstable, impacting your credit score. So, never miss out on your billing cycle.
4. Closing credit card account
Closing a credit card account drives up your overall credit utilization compared to your credit limit. It, in turn, results in hurting your credit score.
5. Filing too many credit card applications
Multiple credit card applications at once can reduce your credit score with each application. It can further make your lenders suspicious about it. So, apply for a new credit card one by one as per your requirement.
6. Not reviewing your billing statements
Not checking the activity on your credit card can make you miss out on fraudulent transactions. Ensure the accuracy of all the charges mentioned and report any fraudulent or suspicious activity to your lender.
7. Waiting to report a lost credit card
Immediately notify your lost or stolen credit card with your lender. Block your card and limit your liability for any fraudulent activity that the thief might perform.
8. Not checking on credit card terms
Review your credit card terms once every year and understand your creditor’s response if you fail to make any repayments. It will help you avoid any unnecessary trouble and understand how much you should avail from your creditor every month.
9. Loaning your credit card
Giving your credit card to others to make a payment can make you lose control over your monthly spending. Taking more credit can make you lose your credit score.
10. Maxing out your credit limit
Never max out your credit limit because sometimes you might not be able to repay such a large amount in full at once. Using up to 30% of the credit limit is considered healthy for your credit score.
Credit cards are a great source to make payments throughout the month without worrying about your bank account balance. But you need to understand the charges and interests applicable on your loan and avoid an unnecessary accumulation of debt. Go through the article above to prevent credit card mistakes that people make. Once you understand, you can apply for a new credit card through our website.