Credit Cards Advantages and Disadvantages
The use of credit cards has significantly increased in recent years, with more and more people turning to online shopping and transactions.
Credit cards offer several benefits, including a grace period of approximately 50 days to make payments and the convenience of emergency use.
However, using credit cards can also lead to financial loss if not used carefully. Here are some common mistakes to avoid while using credit cards:
1) Pay Your Bill on Time
Paying your credit card bill on time is crucial to avoid late fees and a negative impact on your credit score.
Credit card companies may not remind you of the damage caused by late payments, as they benefit from charging late fees.
Remember, the interest on credit card payment is usually high.
2) Pay the Total Due Amount
When you receive your credit card bill, it will include two amounts – Total Due and Minimum Due.
While it may be tempting to pay only the minimum due, this is not advisable.
Credit card companies charge high interest rates if you don’t pay the total outstanding amount, which can lead to a significant increase in your bill every month.
3) Be Careful with Free EMI Offers
When purchasing an expensive item, credit card companies may offer to convert the transaction into a No Cost EMI.
However, be sure to read the terms and conditions carefully, as failing to comply with them can result in high interest charges.
4) Redeeming Rewards Points
Many credit card companies mention reward points as a feature, but fail to explain how to redeem them.
Reward points often expire, leaving customers unable to take advantage of them.
5) Hidden Upgrade Fees
Banks may offer free upgrades from Silver to Gold or Gold to Platinum credit cards, but fail to mention the fees associated with a new credit card.
Upgrading your credit card may also come with increased annual fees and credit limits, which banks may not disclose.
Conclusion
Credit cards can be a safe and convenient payment method, but it is important to be aware of the potential pitfalls.
Paying your bills on time, paying the total amount due, understanding the terms and conditions of free EMI offers, redeeming reward points, and being mindful of hidden fees can help you avoid financial loss.
