Instamojo Payment Gateway: How to Avoid Common Credit Card Mistakes

In today's society, credit cards have become an integral part of our lives. The use of credit cards ranges from offline and online shopping convenience, to airport lounge access, to improving credit scores. Credit cards are a versatile financial asset that make life easier and come with a variety of rewards and incentives. However, having this easy financial power comes with great responsibility and credit cards should not be abused. You may be a reckless borrower who over-swipes, fails to make timely payments, or holds too many credit cards, all of which can end up costing you.

Should I apply for a credit card? How many credit cards should I have?

Whether or not to apply for a credit card depends on your financial needs. The answer to the second question, in turn, depends on your financial situation, level of spending, knowledge of the terms and conditions, and the many benefits offered by credit card companies. Credit cards are associated with reward points; some people may want to maximise available reward points or use a different credit card due to more favourable terms. According to a survey by Experian, Millennials have 2-3 cards, while Baby Boomers have 3-5 cards. You can also choose not to use credit cards at all. The following factors determine how many credit cards you can have. Having a credit card comes with the responsibility of keeping track of and paying your credit card charges in a timely manner. When deciding how many credit cards to own, make your choices responsibly.

The Most Common Credit Card Mistakes

Failure to make timely repayments or only partial repayments: credit cards will indicate minimum repayments and offer purchase instalment options. These late repayments add to the burden of extra interest, meaning you'll be caught in a debt trap. Interest payments are also high, ranging from 21 TP3T to 3.51 TP3T per month, calculated on a daily basis. Interest is also calculated on the balance of the outstanding debt based on the number of days outstanding. Partial repayments will only offset a portion of the amount. Late fees will also be charged. Minimum payment only: Paying only the minimum payment means extending the debt amount unnecessarily. You defer the charges to the next repayment cycle. All of the above issues, such as increasing the outstanding balance and charging penalty interest, apply. If you spend more on your credit card, all these new payments will also incur interest.

Cash withdrawals and profligate spending on credit cards: You must be careful and wise when it comes to credit card spending. Withdrawing large amounts of cash just because your credit card policy allows it is a reckless practice. All cash withdrawals come with a high transaction fee. For example, the cash withdrawal fee for HDFC credit cards is 2.51 TP3T of the transaction amount. if repayments are not made on time, additional penalty charges are levied, adding to the debt. Maintain proper credit utilisation: experts recommend keeping this ratio below 301 TP3T. Keep at least 20% of your entire credit line free at all times. This is the best way to use your credit card. This helps maintain your credit score and have the necessary amount of credit available in case of an emergency. Lower spending also helps in easy repayment.

How long does it take to apply for a credit card?

If you meet the lender's credit policy, you can be approved for a credit card immediately. Whether you apply in person, over the phone or by mail, the credit card company must approve or deny your application within thirty days of receiving it. Factors such as credit score, credit history, income level and credit report are evaluated before a decision is made.

Key points

You should carefully evaluate the above factors and decide if you should apply for a credit card. Avoid holding multiple credit cards from different providers as this may unnecessarily increase your debt burden, while tracking and monitoring repayments can also become difficult. Analysing all your credit card payments and avoiding unnecessary instalments or partial refunds will help you benefit in the long run. Use credit cards responsibly. Make timely repayments to avoid taking on too much debt.

common problems

What are typical credit card mistakes? Typical mistakes that people often make include: a) missing payments b) making only partial payments c) neglecting to review bills. What are some serious mistakes that can affect your credit score? The two biggest mistakes that affect your credit score are absentee payments and late payments. What are the three biggest problems with credit card debt? a) Carrying heavy debt and high interest rates b) Using too much credit card limit c) Applying for too many credit cards at one time. What are the 5C's of credit? a) Quality b) Capacity c) Capital d) Collateral e) Condition. If you need help getting the right technology, real-time settlement of customer payments and refunds for your e-commerce shop, visit PayU.