If you use credit cards improperly, you could get into trouble. Learn which mistakes are the most common while using a credit card.
Thought the transactions on both debit and credit cards operate relatively in similar ways, there are some major differences one should not overlook. A credit card works on the principles of an immediate purchase and future payment, whereas a debit card allows you to withdraw money from your savings account.
Credit cards is an effective line of credit and a very effective financial product when used properly. You may improve your credit score and even handle a financial emergency without difficulty with the help of credit card. However, a lot of people misuse their credit cards without exercising caution, which leads to financial disaster. Any misuse of your credit card, whether deliberate or accidental, could have a big impact on you.
Common credit card mistakes Nepalese users makes and tips to avoid it.
You must be conscious of how to use your credit card in order to avoid common mistakes. Saral Banking Sewa outlines common credit card mistakes you might be making, along with tips on how to prevent them.
1. Not paying credit card bills on time:
All credit card issuers offer a 45-day interest-free grace period on transactions made within a billing cycle and one should never ignore the due date. You must pay your debts in full by a particular day each month, depending on your billing cycle.
Even though you can still pay your credit card balances after the due date, interest will start to charge on the balance that is still due. On credit card due amount, interest rates are commonly very high. In addition to lowering your credit score, missing credit card payments can make it more challenging for you to get a loan in the future.
2. Paying only the minimum amount due:
Do you try to study and understand your credit card statement? If you do, you will see two different types of unpaid balances listed on it: the total amount due and the minimum amount due. While you should always pay at least the minimum amount due, it is not recommended to do so.
Why, you should not only pay the minimum amount due?
Because if you only pay the minimum amount required, the remaining balance will be passed over to your next billing period and will be subject to interest at the current interest rate. Additionally, while you have an outstanding balance on your credit card, interest is charged on all future purchases as soon as they are made.
3. Not checking your statement:
Verify that all of the transactions shown on your bill are correct. If a fraudulent or inaccurate transaction appears on your credit card, you will be able to notify your card issuer.
Annual fees, finance charges, late payment fees, interest rates, and other fees associated with credit cards may not always be disclosed. You can ask your card issuer to waive any such charges that you find on your credit card statement and feel unjustified.
4. Not knowing your Annual Percentage Rate (APR) and Applicable Fees:
When you apply and are granted a credit card, you are given a lengthy cardmember agreement that is probably not at the top of your list of things you should read. It's essential that you review the language and read through major account terms to make sure you comprehend all the related expenses.
5. Cash withdrawals from ATM using your credit card:
Although you can withdraw cash from an ATM using your credit card, you shouldn't do so unless it's an emergency. It's because cash withdrawals from credit card have high interest rates, and in some banks, interest begins to accumulate as soon as you withdraw the money.
Additionally, when you use your credit card to make a cash withdrawal, the interest-free period is voided, and you immediately begin to accrue interest on subsequent transactions. By doing this, your debt keeps growing, and you run the risk of having to pay a large sum of money in the end.
Although credit cards are very practical, you must use it carefully. To avoid unnecessary debts and financial harm, stay away from the mistakes mentioned above.
How Saral Banking Sewa will help you?
Saral Banking Sewa is a loan, deposit products and credit card comparison site of Nepal. We are in the mission of Financial Literate Nepal and we will be more than happy if you submit your queries regarding Credit Card or any other financial product.
Phone: 9851361107 (WhatsApp/Viber)
Facebook Page: https://www.facebook.com/SBS.FinancialServices
When you sign-in/sign-up, you get:
Sign up to discover Saral Banking Sewa