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5 good credit card habits you should know

5 good credit card habits you should know

5 good credit card habits you should know
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By Anshul  Sept 10, 2020 3:19:48 PM IST (Published)

Here are some of the good credit card habits that every user should adopt.

Credit cards have made lives of people easier in many ways. However, it could also be a reason of financial anxiety if one doesn't handle it properly.

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Here are some of the good credit card habits that every user should adopt:
Pay dues in full each month
Customers should always make full payment of credit card dues, suggests Adhil Shetty, chief executive officer, BankBazaar.
Individuals have an interest-free period of typically 40-50 days while using credit cards. In this period, transaction doesn't attract interest, unless the users have withdrawn cash from an ATM.
After the interest-free period, users have the option of making a minimum payment – typically 5 percent of dues. Without the minimum payment, they are charged a late-payment fee. However, despite the minimum payment, they can be charged on the balance at a rate of 2-3 percent a month.
Keep a low credit utilisation ratio
Credit utilisation ratio (CUR) reflects the usage a credit card with respect to its available spending limit.
According to Shetty, users should try to stay within 30 percent of spending limit. If a customer goes overboard, he/she should be careful of full and timely repayment. This will ensure that the credit score isn’t damaged.
Never be late for payments
A single late payment has the potential to bring down the credit score by 100+ points, which will hurt the chances of accessing other forms of credit such as a home or car loan.
Watch the credit score
With any form of credit, including credit cards, customers should be aware of all times what the credit score is.
"If the score is under 750, take corrective action by making timely repayment of dues. Access the credit report each month for free," suggests Shetty.
Avoid taking cash from credit cards
One of the common mistakes committed by an individual is taking cash out of a credit card. Debiting cash from a credit card can be costly as lenders charge more interest for it than they do it for making digital purchases.
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