Credit cards are a much safer option in comparison to using hard cash, if you can use it wisely and judiciously. Plastic money can be considered as a double edged sword: if it is used justly, then you can earn unlimited benefits from it. Whereas if you use it arbitrarily, then it has the potential of making you bankrupt and ruining your credit score.
Here are list of the five deadly mistakes or sins that majority of the credit card holders commit which leads to bankruptcy or losing of their property or home, a condition which is equivalent to being in hell.
Credit limit should be off the limit
You should control your greed while using the credit card. Having a higher limit does not imply that you have to use it compulsively. As you need to remember one important thing by the end of the month you need to pay off the amount to the concerned issuing authorities in full. In case you cannot pay off the whole amount within a time period, then you need to pay high interest on it as well. So it’s best to stay away from the credit limit. The financial experts suggest that it is best to use only 10 to 15% of the credit limit offered to you.
Restrict yourself from the longing of using too many credit cards
You would get many calls all round the clock from the issuing company promoting their latest credit cards by highlighting the lucrative signing up bonuses that will be offered to you. But it is not at all a good idea to fall prey to them. This will increase your propensity of being trapped in the vicious debt cycle as it is extremely difficult to stop ourselves from the lust of the lucrative thing that we see around us when we have so many credit cards in our wallet.
Standard of living an important fact to consider while choosing credit card
Apply for credit cards that suit your standard of living and lifestyle. If you are not a regular traveler, then there is no point in owning a travel credit card that offers free air passage once you have gathered some points by swiping it. There is no point is owning such a travel card just for the sake of owning them and showing off as the card holders have to pay quite some amount of annual subscription fee for owning these cards.
Say no to cash advance from credit cards
Do not ever opt for cash advance from your credit card under any circumstances as these advances come with a very high rate of interest. So it is better to control your gluttony, rather than paying up as much as twice the actual amount which might lead to debt.
It is best to leave your credit card at home while shopping during festive season
We always have the tendency to spend beyond our capability during the festive season. So leave your credit card at home while shopping in the festive season as it will help you stick to your budget and not indulge in overspending.
These are the top five sins that you must avoid while using the credit card as it can safeguard you from the vicious debt cycle and establish a good credit score. If used rationally, then you can earn a lot of benefits from the credit cards like bonus points and special offers.