Credit cards can quickly become a debt trap, if not used correctly.
Credit cards have become an essential part of our lives. It is easy to use and has convenient pay-back options, discounts, offers, and other great deals. If not used correctly, it can quickly become a debt trap and you may have to end up shelling out more money to repay the bill. If you are a new credit card user, you should keep in mind details like checking your name and address, cross-checking the transactions you have made and looking out for errors or unauthorised charges. Here are a few things new credit card users should be aware of.
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Never utilise the full credit limit
On credit cards, the initial credit limits are usually low for the majority. Due to a lack of information, customers use their full credit limit. Using up the entire limit can impact your credit score. It is generally advised to use only 30 to 40 per cent of your credit card limit.
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Always pay the full bill
After the credit card bill is generated, users are left with two choices. The first option is that the customer has to pay off the entire bill in one go. The second option is the minimum payment. Many users prefer to choose the minimum payment option. This results in high-interest rates that get charged on the outstanding amount of your credit card bill. This can lead to the user feeling the pressure of mounting debt. It is advised to always pay off the entire credit card bill in one go.
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Do not make international transactions
Often there are many good offers on international transactions through certain credit cards. The offer may seem very lucrative, but it can cause an unnecessary financial burden on the user. Many credit card users do not know that on international transactions, they have to pay huge amounts of foreign currency transaction fees. If a user wants to make an international transaction at all, it is better to use debit cards or Forex cards, instead of credit cards for such payments.
Pay on time
Avoid unnecessary charges and make the credit card payment on the due date. This is the date by which the bank looks forward to receiving the user’s payment. Postponing the payment will result in additional charges.
