Credit card mistakes: Having a credit card has become an obvious choice of many salaried individuals. With the luring offers, you bank will not leave you from their continuous phone calls promoting their credit cards until you get one. However, managing the credit card is not such an easy task. Often how you make use of your credit card alone decides whether your next loan application going to be approved by the bank or not. That much is the impact it has on your credit score. So, it’s very important to keep certain things in mind while maintaining a credit card.
Though it seems convenient for someone to have multiple credit cards, it is in fact the opposite. Offers such as one year maintenance charges waiver, extra bonus points and low monthly minimum payments may be very luring. But the biggest problem it poses you is the effect it has on your credit score. Having multiple credit cards each one carrying certain balance due would certainly damage your credit score as it makes one look a risky candidate from the lender’s eyes.
Before going ahead with a yes node to the credit card offer your banker has made, ensure that you have read and understood each of the terms and conditions. Do not hesitate to ask your bank officer in case you have any confusion about few clauses.
Minimum amount due is the amount which you have to pay to avoid late payment fee. However, interest is still charged on balance due amount till the repayment. Some individuals may avoid paying off the entire amount due in each month by just paying off the minimum amount due to escape the late payment fee. But eventually this will result in piling up of huge interest costs on the unpaid due balances. Further, this will also have an adverse effect on your credit score.
Use the alternatives such as paying by way of a virtual credit card to avoid the online fraudulent transactions. Don’t get carried away by luring offers while transacting online using your credit card. Do not reveal your card details to anyone. Even your banker does not ask it as he has already saved them in the bank’s data repository.
Do not make the excess payments without reviewing the existing due. This may at times lead to a high credit utilization ration. Credit utilization ratio is the ratio indicates the amount of total credit you have utilized out of the overall credit limit that you card is carrying. A high credit utilization gives an impression that you are credit hungry and negatively affect the your credit score.
Either deliberately or inadvertently, you might be over charged by the issuer in your monthly statement. So, checking the same before you make a payment is a must. If you find any discrepancies between your version and the one you reviewed, raise a compliant with the issuer.
If you improperly discard an existing credit card that has no balance due on its name then you are missing something that will give a boost to your credit score. Rating agencies consider credit age while reviewing your credit history. So, while choosing your 1st card itself, ensure that it can be upgraded in future without swearing off entirely.