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Suryakant Jena

Credit card is one of the most important financial tools at present. Over last few years, the number of users availing the facility has gone up considerably across the globe.

While getting your card may be a fascinating experience at the beginning, however, if you don't use the plastic card wisely, it can turn out to be unconstructive debt and can wreak havoc on your finances. So using it the right way not only helps you stay out of debt but also enhances your credit score.

Here are some of the key things you should avoid at any cost while using credit card.

Paying late

Don't ever fall behind your due payment date for credit card as it may seriously impact your credit score if you continue this habit. If payment is delayed by 30 days, your score gets affected while if it crosses 60 days, the issuing authority may raise the interest rate to highest limit.

Ignoring Billing statement

Whatever happens go through your billing statement as soon as it is issued to you. It is not only the first tip off to any fraudulent activity on your account, but also it contains important information on changes to your credit card terms, interest rates, due date.

Making minimum payments only

While on first instance, it may seem that the Card issuer has made it easy for us to repay by allowing us to pay minimum payments if you are unable to pay full due, it increases the amount of time it takes to pay off your credit card balance. Paying minimum also increases the amount of interest you pay on your credit card.

Don't allow card to get charged-off

This is the worst thing that can happen to your credit card. If you miss your payments for six months, your card automatically slips off into charged mode. Once your card gets into this listing, it may continue to stick with your account for years and could significantly affect your ability to get credit cards and loans in the future.

Applying too many credit cards

Having too many credit cards can tempt those who do not have self-discipline with their money as they can end up getting themselves in debt. If you have too many credit cards you will have to hassle paying bills for all of them at varying times. Due to this, lenders start getting suspicious about the sudden onslaught of credit card applications.

Using too much credit

The smaller your credit utilization, the better it is for your score so just strive to keep balances down. Try not to use more than 50 per cent of your total card limit. There is an interest-free period on credit card purchases sometimes extending up to 45-day plus so in order to avail this benefit, outstanding amount has to be nil.

Avoid cash withdrawals

Cash withdrawals on your card do not come with an interest-free period. So the issuer charges one-time fee plus interest from day one till you repay the amount.

These apart, also follow some other tips to take benefits from the credit card

Convert loans to EMIs

If you cannot pay the entire amount, try to seek credit card issuer to convert your credit into smaller equated monthly installments, because it comes with lower interest rate than normal credit card dues.

Ask your banker for auto debit facility

If you are not able to track your debit accounts, ask your card issuer to deduct the full outstanding amount each month so that it does not rolls-over the credit to next month.

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