Electronic money, such as a credit card is a great facility today. From planning a lavish vacation to extravagant online shopping, credit cards serve a great purpose. By efficiently using credit cards, you can not only save money but also benefit from the reward points and cashback offers available! But for that, you will have to master the following amateur credit card moves (made by newbies and experienced card users alike).
- Less is more
If you already own a credit card and it suffices your needs, nothing better than that. Of course it is somewhat of an ego boost when your wallet is topped with credit cards. But, do you really need them? Unquestionably, the more credit cards you own, higher the chances of getting into increasing debt. Though credit cards reduce the need to carry cash, but they do need to be paid, and from your pocket! Each time you apply for more credit cards, it is registered on your credit report. So instead of using multiple cards, use a few and be regular with paying your EMIs.
- Closing your account
If you are not using your card anymore, usually you will think of closing it. Bad idea! Your credit score is calculated by taking into consideration the length of your credit history. So when you cancel your card, it impacts the length of your credit, hence hurting your credit score. But if you do need to close a card, opt for the one that has the shortest history. Keep holding on to card with the longest history to keep the length of your credit history intact. The idea is to continue with your card even if you are not using it. As it is, there is no penalty on doing so.
- Reaching your credit limit
The credit limit on your card is for your convenience and not for your compulsive usage. It’s always a good idea to limit your usage to 40% of your credit limit and pay your dues on time. This will help guard your credit score, as it is based on your percentage of credit available versus the availed credit.
- Missing your dues
Most of the people think defaulting on your dues or paying the minimum due will only cost them a bit of interest and nothing else. Unfortunately, though more is at stake – your credit score. Constant defaults on your card dues can significantly lower your credit score while just paying the minimum due will only increase your interest amount.
- Compulsive buying
While shopping may improve our mood by way of retail therapy, it certainly does put a hole in our pocket when the credit card statement arrives. Flash sales on online shopping sites can make you forget your actual buying and paying capacity. As a result you start to lag behind on your monthly credit card bills and fall in a debt trap.
It’s time to take your credit card seriously and only use it for what you really need. Avoiding these amateur credit card mistakes can help you benefit lot more from a credit card