Credit Cards are among the most infamous financial tools available due to the abundance of benefits they provide. But these boons can very quickly convert into bane if caution is not exercised at all times. One should avoid incorrect wrong credit card usage by knowing what are the measures to use Credit Card wisely.
Here are 5 most common signs of Wrong Credit Card Usage:
#1: Missing Bill Payments: Not paying your bills on time is a sure-shot way of harming your credit rating significantly. For instance, a 30-day late payment will result in a reduction of 17 to 83 points, and a 90-day missed payment would result in a drop of 27 to 133 points. If this is something that happens to you every now and then, you should see it as a big sign of wrong credit card usage.
#2: Neglecting a declining Credit: If you have a constantly declining Credit Rating then that probably means that you are making some errors in using your credit card. You should always keep an eye on your Credit Report and Credit Card statements to see if there are any signs of errors so that you can rectify them immediately!
#3: Withdrawing Cash using Credit Card: Finance costs are applied to cash withdrawals from the time the transaction is made until the money is returned. These fees might range from 23 to 49 per cent every year. Taking out cash using your credit card is not a correct practice to use the card because it will attract considerable Credit Card Hidden Charges.
#4: Not using your rewards correctly: It is highly recommended to know the reward program of your Credit Card Inside out so that you can use it strategically. A Credit card provides reward points for using the card that can be redeemed in several ways, like a gift card, vouchers, miles, etc. Not using the rewards of your credit card is certainly a sign of wrong credit card usage.
#5: Carrying a balance: On your Credit Card bills, if you are unable to pay the whole sum, the bank permits you to pay a minimum amount of the total bill. For example: If the bill is of Rs. 50,000/-, then the minimum amount may be Rs. 8000/- (depending upon policies). Paying only the minimum amount may appear to be a simple method of paying bills, but if you do not pay your credit card account in full, you may be charged significant interest charges on the outstanding balance. These additional fees might add up to 47 to 48 per cent every year, increasing the existing debt.
If you notice any of these signs with your Credit card experience then it's high time you should start looking for suggestions to overcome any future complications.
Additional Reading - Pros And Cons Of Using A Credit Card
