There was a time when only a few people used to have credit cards. But in today's era, the use of credit cards has become very common. Different people use credit cards according to their needs. Many people use credit cards to buy things on EMI.
So many people use credit cards for online shopping. Some people use it for rewards on special products. But during this time many people make small mistakes. About which they are not even aware. Today we will tell you about 10 such mistakes that people generally do not know.
1. Withdrawing cash from a credit card
Often when people need cash in an emergency. And they do not have money in their account. So people withdraw money using their credit card. This is a very common mistake. People's cash is enough at that time. However, they do not remember how much interest they will have to pay on cash withdrawals from credit cards.
You have to pay more interest on cash withdrawals than on things you buy with a credit card. That is why at such times, if you want, you can borrow money from a friend or relative. But avoid withdrawing cash from a credit card.
2. Using credit cards for everyday things
When people have a credit card, then they buy everything using credit cards. In such a situation, money is not deducted from their account. However, the burden on credit cards keeps increasing. And gradually you spend more in this process. You do not even know how much money you will have to pay later. That is why when you buy small things, buy them in cash or buy them using a debit card.
3. Unnecessary purchases even when money is less
According to Adil Shetty, CEO of Paisabazaar, often when people do not have money, they keep buying things with credit cards. Which proves to be a good option. But this increases your liability in the future. And then when it comes to paying the credit card bill, you have to face a lot of difficulty. That is why avoid buying unnecessary things with a credit card.
4. Not setting up alerts
When you make a lot of payments, it becomes very difficult for you to track all your payments. You do not even know when you made which payment. Nowadays banking facilities have changed a lot. You are given the option to set an alert. In which you can set an upcoming payment reminder. You can set a bill payment alert. You can set an alert on the spending limit. This makes it very easy for you to use a credit card.
5. Cancelling the old card
Many people get the old credit card closed after getting a new credit card. This reduces your spending limit. But your spending ratio increases. For example, suppose you had two cards, then you used to spend thousands of rupees on both of them. But if you have only one card, you will have to spend Rs 2000 from that one card. That is why stopping the old credit card affects your credit score. You may spend less but keep the card active.
6. Spending more before taking a loan
When you go to take a loan, the loan-giving banks and companies look at your credit history. In which they look at your existing loans and high transactions done on your credit card. If you have already done very big transactions on your credit card, then it is very difficult for you to get loan approval. That is why do not do any big transactions on the credit card before applying for a loan.
7. Paying medical bills with a credit card
When a person is sick and a lot of money is spent on treatment, then he chooses the option of paying with a credit card. This seems right at that time because money does not have to be paid from the pocket. However, after paying the medical bill through a credit card, the credit card bill is generated.
If you do not pay it on time, then an extra charge is also levied on you. This can cause you to loss. That is why it is better that instead of paying medical bills through a credit card, you take medical insurance. This will save you from unnecessary expenses.
8. Balance transfer without knowing the repayment strategy
People get the option of a balance transfer on a credit card, that is, if you have spent money from this credit card, then you can pay its bill from another credit card. But sometimes you do not have to pay separately for this. At the same time, many times you have to pay interest separately and also have to pay the charge of the credit card to which you are transferring the balance. When you transfer the balance without knowing, then you increase the burden of debt on yourself.
9. Not updating contact details
Many times people shift their house. But do not change their address in the bank. They are not able to get the documents sent by the bank. This also includes the credit card statement. So sometimes credit cards are also included. That is why when you change your house or any other details, make sure to change it in the bank as well. So that your information does not fall into the wrong hands. And you can change any payment or banking-related details in the wrong way.
10. Not reading the fine details properly
Whenever you take a credit card from a bank, you are also given documents along with it. These contain many conditions regarding the use of the credit card, information about the interest rate, and credit card fees. And the penalty for not paying on time and many other things are written.
Many people start using the credit card without reading these fine details. Which sometimes puts them in trouble. Always read and understand these things and only then use the credit card.
(PC: Freepik)