6 Credit Card Mistakes You Must Avoid

Credit cards are easy to use, convenient, useful, and builds your credit score. However, there is a problem if you do not know how to use them wisely. They can pose monetary challenges if you keep buying stuff on credit without clearing the monthly dues regularly. If you do not have a fixed monthly income, then credit cards are not for you. If you choose to use it, make sure you clear all dues on time and use it responsibly. Else, your late charges and interest will inflate, making things difficult for you in the future. If you fail to make payments, it will damage your credit score, and affect you financially. Whether you are new to credit cards or using one already, here are the six common mistakes that you must avoid:

  1. Reaching the Maximum Credit Limit

If you max out your card’s limit, you will be in a big soup. It is harmful on many levels. If you use the maximum amount, you will have a tough time clearing the outstanding balance at the end of every month. When you use up the limit and have an emergency all of a sudden, it will be very difficult for you to arrange for funds. Your situation will be more challenging if you do not have enough cash to make an unforeseen payment. Besides, when you max out your limit, it will increase the credit utilization quotient. Once this happens, it will damage your credit score. Most of the banks and credit card companies perceive a credit utilization ratio of 30 percent as a major warning signal. Therefore, keep the ratio below 30 percent. If you reach this threshold, you will be in a financial mess.

  1. Making Late Payments

If you do not pay your credit card bills on time, it will affect your finance in many ways than you can imagine. You will have to shell out a late payment charge and make a minimum payment without fail to meet the deadline. Besides, interest will accrue on the amount you failed to pay. Now, what does this mean? You are making more than one payment for defaulting. So why not pay on time and improve your credit history? You will end up damaging your credit score if you continue to make late payments past the due date. To avoid these problems, set a reminder a day before the due date on your smartphone. Alternatively, you can also arrange for automatic payments from your bank account. The amount is automatically deducted towards the end of your card billing cycle.

  1. Paying the Minimum Amount

You think that clearing the minimum amount is better off than defaulting payment. Wrong! If you stick to this practice for several months, the interest charges will add to the outstanding balance. Yes, it will accumulate faster than you can imagine. The longer you let the balance to stay; you run the greater risk of maxing out the credit limit. It will affect your credit report and leave you in hot water if an emergency arises. Therefore, we recommend that you make timely payments to avoid interest accrual. Now, there are exceptional situations. In rarest of rare cases in the past, some consumers complained when they saw a wrong outstanding amount in their credit card bill. In such scenarios, track your expenses regularly and validate it with the bill. If you find an erroneous entry, inform the card issuer immediately to fix the problem.

  1. Ignoring the Terms and Conditions

If you think the lengthy terms and conditions document that comes with your credit card is just formalities, you are highly mistaken. It’s drafted for a reason and not just a boring set of rules or regulations. Therefore, read the terms and conditions page very carefully. Take your time and give it a read. Ask people who have used credit cards if you do not understand something in that document. Knowing the rules and guidelines will help you make smart buying decisions. Do not disregard the card’s billing cycle. Familiarize yourself with the fees and the rate of interest. Go through the late payment rules.

  1. Speak up

When it comes to your card’s terms, they are not always set in stone. If you have any problem, feel free to talk to the issuing company. Based on a recent survey, 80 percent and more customers improved their credit card terms by talking to the company. You will need to be a bit proactive in this respect. If you do not vent out your problems, nobody will know. If you have a genuine concern, the credit card company may make certain changes to your current agreement. If you request, the issuer may reduce the rate of interest or annual fee. The issuing agency may also increase your credit limit. It will give you more flexibility as well as improve your credit utilization ratio.

  1. Falling for Deferred Interest

You will find many credit card agencies tempting customers with a deferred rate of interest. Avoid falling prey to such traps. Now, what does that mean? The card issuer allows you to use the card without paying any interest on the outstanding balance presently. When you do so, i.e., not clearing the balance after the end of the grace period, the issuing company will add a finance charge to your existing bill in full. This fee is in addition to the original balance that you have in the card statement. You will have a problem paying off the amount at the end of the grace period. That is because the finance fee is a substantial sum that you will need to pay.


You do not become a smart credit card customer in a day or two. It takes time. Most consumers make some mistakes when they first use it. It sounds sad but true. You are fortunate that you know about the common blunders card users make. Therefore, keep in mind these pointers when using your credit card. Avoiding the mistakes will help you to make the best use of the card. You can pay your grocery and utility bills if you have no cash. Only remember to clear the outstanding credit card balance on time.

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