5 Credit Card Habits You Must Quit Right Now

Getting a Credit Card can offer you an unprecedented level of financial freedom. Not only will the card allow you make convenient purchases, and spend on dining and entertainment as and when you want, but will also help you enjoy some perks, which may not be in your reach if it were just for your salary! And before we forget to mention, your Credit Cards also help you accumulate reward points or other such incentives, which can be later redeemed on your accord!

That being said, Credit Cards may turn you into a compulsive spender thanks to the temptation of enjoying additional reward points, or simply make you too carefree regarding your expenses, since you almost always have a few days before the purchase starts accruing interest. As is evident, this might not be the apt way to use the card. In fact, if you genuinely want to enjoy the benefits that come along with Credit Cards, without attracting any troubles, it is highly recommended that you steer clear from these 5 habits!

1. Extreme Inclination Towards Earning Reward Points

Before you start using a Credit Card for your day to day purchases, it is important to understand that the sole reason behind this use should not be to amass reward points. You must always remember, that brands that partner with your Credit Card will do their best to instigate you to spend as much as possible. However, as an aware customer, the onus of not falling for such marketing gimmicks lies on your shoulders. After all, the more you spend on purchases, the higher will be your Credit Card bill, and the more unmanageable will it become. Follow a simple rule – buy only what you need, and not what is advertised to you.

2. Overspending

You could consider this to be an extension of the first point. Many users are tempted to use the card to enjoy fine dining experiences, high-end entertainment alternatives and exceedingly expensive clothes, gadgets and more. All these users can see is their capacity to purchase items which were once out of bounds for them. They, however, tend to overlook the fact that at the end of the day, they themselves will be responsible for repaying the bills in entirety. Just in case they fail to pay their bills in time, the outstanding balance may accrue interest. This habit can eventually lead to a low credit score, thus hurting the creditworthiness of the borrower.

Hence, if you are planning to get a credit card for yourself, make sure you don’t fall into the vicious circle of spending beyond your means, and defaulting on bill payments.

3. Delaying Card Payments

A vast majority of banks allow cardholders an alternative to clear their balance payment at a later date, and avoiding late payment penalty simply by paying the minimum balance on the due date. The minimum balance is usually 5% of the total bill and is therefore easily payable. This facility may lead the borrowers to believe that timely payment is not compulsory. However, they tend to forget that their unpaid bill accrues a hefty interest often ranging from 15 to 42%, and may rob them off their hard-earned money in the long run.

Hence, when you own a Credit Card make sure you do not commit this mistake and pay your bills in full, every single month!

4. Paying Credit Card Bills Through EMI

When a borrower amasses a huge Credit Card bill, they usually become overwhelmed by the responsibility and tend to look out for simple ways to get out of the situation. While the alternative of paying the bill through equated monthly instalment (EMI) may seem to be a great alternative, it is important to understand, that this entire arrangement defeats the very purpose of having a Credit Card – the financial freedom. On the contrary, payment of Credit Card bills through EMI adds to your financial burden. This alternative should therefore be avoided as much as possible.

5. Ignoring Credit Card Bills

A vast majority of Credit Card owners don’t bother to review their monthly bills, which is a sign of irresponsible borrowing. In some cases, you might find small transactions worth Rs. 100 or even less. Make sure these were made by you. If not, your card details may be in the wrong hands, and the miscreant might just be making these transactions to see if your pay heed.

In such a case, you must inform your card issuer right away. This simple habit may save you hundreds and thousands of rupees, which may otherwise go down the drain. Therefore, you should make it a point to always keep an eye on your card bills.

Now that you know of some of the poor habits that borrowers often adopt and end up paying dearly for, make sure you only apply for a Credit Card, if and when you can promise yourself to steer clear of these blunders.

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