Five common credit card mistakes!

By | January 9, 2015

Credit Card Management

Sandeep, a young IT professional, was living a care-free life like any other young job entrants. However, he decided to buy a flat near his office for convenience. But to his surprise, with his high earnings and no other loans, his home loan application got rejected because of poor CIBIL score. How did this happen?

Sandeep realized it after discussing with the credit manager that the loan was rejected as his credit card repayments were not regular.

Many credit card holders commit some common mistake that puts them in the category of defaulters, or unable to take the maximum benefits of plastic cards. Let us look at the five common mistakes every credit card holders must avoid to make sure that their cards will never become a liability.

  1. Opting for too many credit cards- One common mistake of many people is opting for multiple credit cards. Bank executives are smart to sell cards to every new job entrants and young employees. But don’t fall into their words.


Many new entrants in the corporate world would love it to see many cards in their wallet. No doubt cards will make your life simple with advantage of buy now pay later. But opting for multiple cards is the first step towards a mis-managed financial life and possible debt traps. Since credit cards offer luring schemes, people with multiple credit cards will find it irresistible to swipe them for various purchases and gradually fall deep into the never ending cycle of high interest rates and debt. Even a single default on credit card repayment can mean a substantial interest outflow and possible bad CIBIL score.


  1. Not checking the monthly statement: You are getting a lot of promotional mails from your banksand you ignore most of them. Some mails may automatically go to your promotions folder (if you are using g-mail). Of course, physical copies are oftenmounted up on your desk without being opened.


A common mistake of ignoring the credit card monthly statement or not checking the statement in detail can be a huge mistake that can cost you dearly. In this world of online payments, there has been an increase in the number of credit card frauds. By ignoring monthly bank statements, you may never know if your credit card security has been compromised or the card has been used to make purchases without your approval. Also there are chances of getting wrongly billed, or levying extra charges by the credit card company.

  1. Making only the minimum due payment: Many single youngsters gets exhausted with their money close to month end, swipe for the remaining days and pay the minimum amount on the due date.Paying the minimum pending charges due each month is a common mistake followed by many ignorant card holders. By paying more than the minimum stipulated due amount for the month, the card holder not only lowers the outstanding amount but also lowers the effective huge charges on the dues.


  1. Not knowing your billing cycle: Many card holders, especially those who have more than one card do not know their due dates exactly and makes a monthly repayment on a fixed date.While most credit cards offer a 30 to 40 day interest free period, it does not start from the day of the purchase but as per the card’s billing cycle. But a lot of credit card holders commit the mistake of thinking the interest free period would begin at the time of their purchase.


For example if the billing period of the card starts at 10th of every month, any purchase made by the credit card on the 8th would result in only a two day interest free credit window. It is therefore imperative for all credit card holders to know their credit card billing cycle and time their purchase accordingly so as to get the maximum benefit of their interest free credit window.


  1. Shopping for reward points- Reward points are great marketing tools today for every credit card company. No doubt it offers good deals for you while it also urges you to use your credit card frequently.  Some credit card users however gets carried away with the reward point system and shop only to fulfill the point accumulation by buying products or services they may not necessarily need immediately. Such a scenario can lead to a loss in the monthly financial planning. Also before making any purchase for accumulation of reward points, make sure to know the expiry period of the points as most cards come with an expiry period for reward points.
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Category: Credit Cards Credit Score Money Management Yahoo

About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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