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Nothing beats the joy of living a financially independent life. With the advent of simplified and dynamic instant financing options, how can one not gush about the enhanced monetary benefits? Credit cards have formed an integral part of financial infrastructure for over a decade. Our impromptu shopping pattern is the prime testimony that credit cards have revolutionized how we utilize credit lines for fund transfer. However, with great power comes bigger responsibilities, and in the case of managing our finances, we need to be very calculative and practical while making our financial decisions.
Credit card loans are used in multiple ways to help us navigate through our financial obligations seamlessly in our daily lives, such as online bill payments, educational fees, online shopping, or any other digital form to send money from our end. However, we tend to make bad decisions in the urge to satiate our uncertain financial needs. This blog post will explore the intricacies of using credit cards diligently and how to avoid falling into financial pitfalls.
Signing up for multiple credit cards: you don’t want your credit card portfolio to look like a red flag to the credit score agencies. So, avoiding buying into the trap of irresistible offers and discounts endorsed by different providers is better. Even if you plan to upgrade your card, convey this to your issuer company so they can transfer your account to the new card type instead of deleting the old one.
Trapped with the wrong card type: using our credit cards is crucial in determining which card type we want to own. For example, business credit cards, looking for a card with a relatively lower interest rate, etc., are some of the reasons to consider. Deciding randomly by watching a TV commercial or being convinced by something that benefitted a friend is different than the right approach toward selecting a credit card for individual needs.
Opting for minimum payments: we need to understand that “minimum payment” is just a trap to lure the users into thinking they are not burdened. As a matter of fact, in this way, one could erode their savings for years in the course of making payments for the interest rate incurred. That is why it is always wise to restrain ourselves from impulsive buying and use our credit cards only to that extent when we are sure to make the outstanding payment within the specified threshold.
Ignoring the credit card statement: in our busy life schedule, we often tend to skip the reviewing part, especially in the processes that are recurring, such as monthly payments of credit cards. We should analyze the transactions statement to ensure that all our payments are authorized and charges are valid, and also to identify the areas of overspending that can be a learning curve for future usage of the cards. It is also necessary to do so to prevent ourselves from being the victim of credit card fraud which is an ongoing menace these days.
Purposeless acquisition of cards: we should get only credit cards if we have a dire necessity and a strong reason for that. Acquiring cards in the greed of credit card cashback & bonuses, extra miles, and additional discounts is not a healthy habit for building a strong credit portfolio.
Consumers have rigorously made these mistakes over the past few years and have yet to realize how damaging they can be for our credit profiles. Hence it is time to take cues from the above pointers and embark on a wholesome and rewarding financial journey.
