Credit Card: Shopping with a credit card? Avoid these 5 mistakes
The use of credit cards for shopping increases during the festive season. But forgetting about it unnecessarily can increase your debt burden. Here are some important guidelines to keep you away from financial problems by following them.
Table of Contents
Set a Budget
It is important to set a budget before shopping during the festival. Without a proper budget, you may end up using more than your credit card limit, which may increase your debt burden.
Use credit limit judiciously
Every credit card has a certain limit. 70 to 80 percent of this limit should not be used during festivals. Your CIBIL score may deteriorate and there may be difficulty in getting a loan in future. Therefore, stay below 30 percent of the credit limit.
Remember the bill deadline
Credit card bills are generated on specific dates every month. Keep that date in mind while shopping. Missing the bill by the due date may attract additional interest and penalty.
Avoid over-shopping
Avoid making extra purchases to earn reward points on credit cards. This can increase the debt burden and later there may be problems in repaying.
Be careful of interest rates
Even if you have the facility of monthly bill payment, interest may be charged on purchases made with a credit card. The interest rate can be up to 30-40 percent. Therefore, try to make monthly payments and avoid the burden of debt.By following these precautions, you will not have to face financial problems during the festive season and your credit score will also be good.
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Maxing out your credit card: It’s important to not use up your entire credit limit, as this can negatively impact your credit score and ability to borrow in the future. Try to keep your credit utilization ratio below 30% of your available credit.
Not paying off your balance in full: Carrying a balance on your credit card can result in high interest charges, which can quickly add up. Try to pay off your balance in full each month to avoid accruing unnecessary interest fees..
Overspending: Using a credit card can make it easy to overspend, as it doesn’t feel like real money. It’s important to stick to a budget and only charge what you can afford to pay off
Ignoring your credit card statements: It’s important to review your credit card statements regularly to check for any unauthorized charges or errors. Ignoring your statements can lead to missing fraudulent activity or discrepancies in your account.Credit card shopping
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