8 Biggest Mistakes You Could Make With Your Credit Card
A credit card is a convenient and powerful financial tool but this plastic card may cause a serious issue if you don’t use it carefully. Using your credit card in UAE in the right manner is a key to protecting your credit score and staying out of debt. To help you use credit cards more carefully and wisely, here are 8 biggest mistakes that you should avoid at all costs.
Not Paying Your Outstanding Balance In Full Each Month
Credit card providers make it easy for you to repay the outstanding amount by allowing minimum payment. But keep in mind that paying the minimum payment on your credit card not only enhances the time it takes to pay off your credit card balance but also it increases the interest that you pay on your credit card.
It is highly recommended that pay off your outstanding balance in full each month that will prevent you from paying a high-interest charge.
Paying late your credit card bill
Don’t let your payment due date cross you buy. Pay your credit card monthly bill payments at the right time. You can also set a reminder in your phone or system for remembering your payment due date if you keep forgetting. Since paying a few days late simply means incurring late payment fees. If your payment is more than 30 days late then it may also affect your credit score negatively and if your credit card payment is more than 60 days late, your credit card provider may increase your interest rate to the highest penalty rate.
Not Checking Your Billing Statement
If you don’t check the billing statement of your credit card, you may miss your payment due date or paying less than you should according to the current time. Not checking out your credit card billing statement could cause you to miss some important information about changes regarding your credit card.
Your credit card billing statement is also the first tip-off to any kind of fraudulent activity on your card. So, always check out your billing statement to make sure that all the charges are correct.
Waiting to Report Your Misplaced or Stolen Credit Card
The longer time you take to report a lost or stolen card, the longer time the thief has to charge up your account. So, report a misplaced card as soon as possible to limit your liability for fraudulent charges.
Maxing Out Your Credit Card
Your credit scores also depend on the factor that how much of your available credit limit you are utilizing: the less, the average. Maxing out your credit card, even if you pay the outstanding balance in full can affect your credit score negatively. Also, getting close to your credit limit puts you at risk for over limit charges and penalty interest rates that your credit card charges when you exceed the credit card limit.
So don’t use more than about 30% of your total credit limit. Maintaining an adequate credit card balance not only enables you to get a good credit score but also you will have a manageable payment amount.
Spending On Your Credit Card Just To Earn Rewards
Majority of the banks offer rewards credit card in UAE and there is a right way and a wrong way to use them. If you use rewards credit cards in the right manner, you can avail of several benefits such as free flights, free trips, shopping vouchers, and much more.
However, there are some people who get over excited about earning the potential rewards and they fall into the trap of spending just to reach the minimum spend requirements. As a result, they end up in a debt trap. So, before you opt for any reward credit card, make sure you know how will you reach your minimum spend requirement so that you don’t have to face any hurdle in the future.
Taking A Cash Advance
Most credit cards allow you to withdraw a portion of your available credit limit in the form of a cash advance. While it may sound quite convenient if you are short on cash, it is not a good idea.
Credit card providers typically charge higher interest rates on cash advances than they do charge on retail purchases. In addition to this, they don’t provide a grace period on cash advances so interest charge will begin accruing instantly. So, try to avoid this expensive borrowing completely.
Not understanding The Sole Purpose of Credit Cards
Some people make wrong use of their credit card without even understanding the charges that are associated with it. When you purchase any item with a credit card, you will have to pay it back often with interest. So, use your credit card carefully otherwise it may send you into debt.
The Final Verdict
If you are looking for the best credit card in Dubai or in the UAE, make sure you avoid these 8 biggest credit card mistakes to make the most of your credit card. As you find the right credit card, use your credit card responsibly to maintain a good credit score and enjoy its vital benefits.
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