7 Credit Card Sins You Must Avoid


March 21, 2019

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Property Conveyancing

If you depend on plastic money for most of your transactions, a credit card is something which you will always have. Most people depend on their debit cards and credit cards or various other third-party apps to make any kind of purchases. According to statistics, in India, the credit card usage in 2018 increased to 4.1 crore when compared to around 2.7 crore in 2017.

However, when you hold a credit card and depend on it daily, there are a few things which must be remembered in order to make sure your card is safe and your personal information as well.

Here are the mistakes many people tend to make and should be taken care of: 


Information about you and your credit card should be kept safe. People who often pose as bank officials will call you to get your personal information and credit card information. A bank official will never ask for credit card number, CVV or OTP. The bank usually asks for date of birth or the last transaction carried out on the card to verify your identity. While making purchases, it is strongly advised to make sure your credit card is always with you.

Payment of minimum due 

If you make a purchase, it is essential that you can repay the amount in its entirety along with the interest at the end of the month. Since banks offer the option of payment of minimum due, most people opt for it without knowing the disadvantage of it.

If you pay the minimum amount due, you will need to pay additional rate of interest which will be levied on the unpaid amount. The interest rate charged is usually 2% to 4% p.a.

Payment of credit card bill on time 

A credit card has an important role to pay in your credit report and will also reflect on your credit score. The bank, at the end of every billing cycle, sends e-mail and SMS alerts about repayment behaviour.

If you cannot pay your credit card bill on time and in full, it will reflect negatively on your financial expenditure. This, in turn, has a negative effect on your credit score and report.

Withdrawing cash through a credit card 

One of the mistakes people commit is withdrawing cash or take a cash advance with your credit card. Credit cardholders are given the option to withdraw cash through their credit card, however, it is strictly not advised to do so as banks charge a heavy interest on the amount you have withdrawn.

If you have the money to repay the cash withdrawn in full and it is an emergency, you can choose withdraw cash with your credit card.

Spending only to earn rewards 

Another reason why people opt for credit cards is because of the rewards and benefits which come with it. However, it is a mistake to keep making purchases in order to earn reward points and enjoy the benefits offered by the card.

It is advisable to redeem the points you have accumulated every 1-2 years.

Abrupt closing of credit cards 

People often tend to close their credit card accounts once they see that there is no outstanding balance to be paid. However, this increases you credit utilization ratio which is bad for your credit score.

Apart from this, once you close a credit card, your complete payment and purchase history of that credit card is erased. This affects your credit score as well. Hence, it is advised not to close your credit cards.

Using the full limit of your credit card 

Like mentioned before, the credit utilisation ratio plays an important role in calculating your credit score. It measures up to 30% of your score.

For example, if you have a credit card with a limit of Rs.50,000 it might be tempting to use it to make a big purchase. This is one not advisable. If you make one purchase worth Rs.40,000, it reflects poorly on your spending skills and might lower your credit score.

If you wish to make a larger purchase, you will need to maintain than one credit card in order to balance your purchasing habits and be a responsible spender in the eyes of the bank.

These are the major credit card sins most people tend to commit. In order to understand more, it is always better and advisable to keep in contact with an official of the bank you have taken a credit card from so that you have a better grasp on what might affect your credit score and how must you utilise the credit given to you.


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