In this world of Digitalization, ignoring the credit cards stands next to impossible whether you love or hate them. Few people love the credit cards for offering them the facility to use now and pay later. Few hate the same for motivating for the impulse purchase and getting trapped into the unpaid debt. It is unfair to decide whether the credit card is good or evil, it completely depends on individual usage. If you are smart enough to use the credit card wisely, you will be able to make most of it. Keep reading to know how avoiding certain credit card habits can help you make it your soul mate.
Credit Card Habits One Should Avoid
No balance forward
Most of the credit card users get tempted to swipe the credit card for impulse purchases. Though credit card gives you an option to use now and pay later. Make sure you will afford to make the payment in full at the end of the billing cycle. If you are unable to pay the amount within the timeframe, you are obliged to pay the interest rate on the outstanding balance. If you are paying minimum balance every time, you will be paying the interest on the revolving debt every time. Swipe the credit card only when you can pay in time.
Keep credit utilisation ratio low
Credit utilisation ratio is nothing but the ratio between the amount utilised and the credit limit available. When you carry a balance more than 30% of the credit limit, your credit utilisation ratio termed to be high. If you have to carry 30% of balance forward, make sure you pay a partial amount of the bill so that you don’t dent the credit score. If your credit utilisation is high on a constant basis, request your bank to increase your credit card limit.
Avoid late payments
When you are using the credit card to address your monthly expenses, make sure you pay off the bill on time. Late payments will lead to high rate of interest on the outstanding credit card balance. Not only that, late payment history stands on your credit report for the period of 7 years in the credit report and may hamper your credit needs.
Many credits are introduced in the market every day from time to time. Rather than getting tempted with the exciting offers, restraint yourself from collecting many as it will be difficult for you to manage these cards because it will be difficult for you to remember due dates, minimum payments and spending limits on each card.
No too much reliance on balance transfer
There is doubt in the fact that balance transfer is a boon in disguise for the people who cannot handle outstanding balance on the credit card. This turns to be a good choice if you can repay debt with 0% APR. Jumping from one card to other in the wake of enjoying free interest-free period will multiply your debt but nothing else.