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Credit cards have become an important financial tool, offering people the chance to manage their finances on their own timeline.
People often rely on credit cards for their monthly budgeting and enjoy the benefits like reward points and cashbacks. Here are 10 mistakes to avoid while using a credit card.
Many just pay the minimum due amount at the end of a month without realising that the rest of the amount accumulates interest and increases their debt.
Utilising the credit close to your limit negatively impacts your credit score as it can hint towards financial distress. Credit rating is crucial for all financial aspects.
Cash withdrawals from credit cards attract high interest charges that begin accruing immediately. Never withdraw cash using a credit card unless in an emergency.
Ignoring your credit card statements at the end of a cycle can cause you to miss unauthorised payments, billing errors or overspending from your card.
Credit cards should not be used as extra cash, as they can lead to irresponsible spending and build up your debt, which can be hard to manage later.
This one is obvious, but if you miss or delay a payment, your credit score will be impacted hugely. Further, late payments incur high fees and interest rates.
If you pay a part of your bill and carry the rest to the next month, you will be charged interest on the unpaid amount, which will make your debt grow faster.
You must read credit card terms carefully before getting one. Failing to understand interest rates, fees, grace periods and reward rules can cost you more and limit your benefits.
If you apply for credit cards too often, a new inquiry appears on your credit report, which can lower your credit score.
Closing a credit card too soon can negatively impact your credit score by shortening your credit history.
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