A credit card can be your great asset. On the other hand, it can be your great burden as well. Your irresponsible use can make your credit card into an asset to burden. Credit cards carry interest rates so it is wise to make a payment on time. 

A credit card is like a trump card in your pocket. So it is difficult to resist oneself to spend more with a credit card. Only a calculative spending habit can ensure the best use of credit cards. So it is obvious that a credit card is an important asset for anyone. 

Sometimes people make credit card mistakes that should not be done. In this blog, we will follow up on 8 mistakes of Credit Cards which you should not do.

  1. Maintaining month to month balancing

Credit cardholders think that keeping balance in their credit card can improve their credit rating. A large number of Bangladeshi credit cardholder believers believe this myth. But experts say that keeping balance month to month can’t help to increase your credit ratings. 

In the real world, balanced credit reduces credit score and it hampers the cost of money. It also makes your interest charge expensive. So, this mistake should be avoided. 

  1. Only to make minimum payments

It’s a common tendency to make minimum payments. But it is not a good practice to pay the minimum due. It enhances your debt and piles up interest rates even higher. It is advised to make your payment on time so that it can’t be a burden for you in the future. 

  1. Never miss a payment

Late and missing payments can severely affect your credit ratings. In Bangladesh, due to missing payment or late payment can reduce your credit ratings 20-75 points. So always make payment within 30 days so that your rating doesn’t get hurt. 

Now an auto payment system is available so you can choose this system to make your payment on time. Sometimes people get busy with various work that they do not remember the due date. For that reason, auto payment can make your life easy and trouble-free. 

  1. Ignore or forget to reviewing billing statement

It is always important to check all kinds of transactions that are made with a bank by using a credit card. Sometimes accurate bills are not made by the card provider as a result you might fall into huge trouble if the problem can’t be detected on time. A double-check can help you to file an action against your card provider. So it is a wise decision to check your transaction list at least once a week. 

  1. Clear knowledge about your APR and other applicable fees

After approval for a credit card, the credit card company serves a long terms and conditions list. We most often ignore reading all those terms and conditions. However, it is wise to give a read to the whole terms and condition list. If it is not possible then you must have a look at some key points. 

  • Annual fee: Please check annual holding charge fee for the card
  • Purchase APR: Carefully calculate your monthly interest rate by dividing yearly interest with 12. 
  • Penalty APR: Sometimes penalties made by the card issuer for different reasons. Carefully check the penalty APR for the future.
  • Late payment fee: Note down late payment fee because it is important to know about late payment while you are applying for a credit card.
  • Foreign transfer and balance transfer fee: It is very important to know about the fund transfer fee at home and abroad. 
  1. Having a cash advance

Among various credit card activities, this is one of the riskiest actions to take cash in advance from a credit card. Because interest will add immediately after the withdrawal of the fund. So this mistake should not have happened. 

  1. Not clear knowledge about introductory 0% APR offers

Many credit cards come up with attractive offers to grave customers. 0% APR offer is one of those attractive offers. Sometimes people do not get a clear understanding of this 0% APR to offer as a result in future customers having to face serious consequences about this. No doubt it is an attractive offer all you need to ensure exactly when the introductory 0% APR starts and ends. 

  1. Close your credit card

The total amount of time you’ve had credit is one aspect that makes up your credit score. If you close your credit card, the total length of your credit history will be affected.

For example, if you have a 6-year-old card and a 3-year-old card, you have an average credit of 4.5 years. When you close your 6-year-old card, your credit age will fall to 3 years.

It is usually not recommended that you close your credit card, particularly your oldest card. But there are times when it can make sense to close a credit card, such as when you’re paying an annual fee that doesn’t outweigh the advantages of the card.

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