5 signs of incorrect credit card usage
- Consistently pay the minimum repayment amount
Many credit card holders mistakenly believe that paying only the minimum repayment amount can avoid paying large financial expenses. Paying the minimum due will only avoid incurring late fees and credit scores. You will still incur huge financial expenses of 23% 52% per year. On the unpaid part of your credit card bill. In addition, failure to pay credit card fees will result in the cancellation of the interest-free period for transactions with new cards until the entire unpaid portion is paid.
If you cannot pay the full credit card fee, please convert the unpayable part to EMI. The interest rate for EMI conversion is much lower than the financial costs of unpaid installments. This option provides a repayment period of 3 months to 5 years, allowing cardholders to repay unrepayable credit card bills in installments at a much lower interest rate based on their repayment ability. In addition, taking this path can even restore the benefits of credit card interest-free periods.
- Withdrawal by credit card through an ATM
Withdrawal by credit card charges a withdrawal fee of up to 3.5% of the withdrawal amount. Additionally, card issuers also charge up to 52% of annual financial commissions. From the withdrawal date to the refund. Therefore, try to avoid withdrawing cash by credit card. If it becomes completely unavoidable, be sure to refund the full amount withdrawn as soon as possible. Doing so will reduce additional interest costs in the form of finance charges.
- Always keep your credit utilization (CUR) above 30%
CUR is a percentage of the total credit limit you use. Since lenders generally believe that people with a CUR of more than 30% are essentially credit hungry, credit bureaus can also lower the credit scores of those with a credit card level of more than 30%. Therefore, limit your credit card total to 30% of the total credit card limit.
If you frequently exceed this limit, please ask your current credit card issuer to increase your credit limit or apply for additional credit cards. Choosing any of these options can help you lower your CUR, as long as you do not increase your credit card fees disproportionately after reaching a higher credit limit.
- Ignore the validity period of reward points
According to the reward points program provided on the credit card, cardholders can use the accumulated reward points to purchase gift certificates, convert them into airline miles, and purchase goods at designated outlets or online partners, or according to Adjust them for unpaid card bills. However, most credit card accumulative bonus points will expire 2-3 years after you get credit. Few credit card issuers offer cards with no reward points expiring. Therefore, you should always pay close attention to the validity of your reward points and the terms and conditions related to their redemption.
- Rejection of Proposal to Increase Credit Limit
Many credit card holders often avoid raising the credit limit due to concerns about overspending and the possibility of falling into a debt trap. However, keep in mind that if used correctly, this can help you improve your financial situation. Therefore, whenever a card issuer provides you with such credit limit promotion offers, you should take that into account.
Doing so will improve your financial ability to deal with financial emergencies or increase spending on holidays or any important occasion. Also, keep in mind that increasing your credit limit can lower your CUR, which can help improve your credit score, thereby improving your eligibility for loans and credit cards in the future.