The credit cards allow the cardholders to pay the merchants for their purchases on a later date. The card holders like to get the credit of around 50 days on their purchases. Therefore, credit cards are becoming popular day by day. However, many card holders use the credit cards without knowing the credit card policies. If card holders continue doing this, then they may end up incurring huge penalties.
Following are some of the top mistakes to avoid while using credit cards:
1. Late payment of bills
Failing to pay your bills on time would attract late payment fees and in addition to this, you will immediately start to incur more interest charges on whatever amount you don’t pay. It will also make your credit score to decline.
2. Reaching your maximum credit card limits
When your credit card transactions reach the maximum limit, then you may have fewer options to raise money in case of emergency. Also, it may spike your credit utilisation ratio which may, in turn, lead to the weakening of your credit score.
3. Closing an old credit card
If you are planning to close your old credit card for no good reason, then please try to avoid doing it. Because, if your credit card has the high credit limit, then leaving it open may keep your credit utilisation ratio down. Also, if you are the card holder for a long time, then it may help to prop up your credit history.