Credit cards could either help you or hurt you, depending on how you use and repay them every month. They can help you in many ways if you give them to the right people who use it judiciously. The right way of using credit cards, even if you have multiple, can even help you get out of a money crunch. But if you don’t watch how you use your cards, it’s easy to get into debt. You’d also have to pay a lot of fines and fees. These are clear signs that you’re not using your SBI cashback credit card wisely.
Making only the minimum payment on the same credit card debt every month
People who can’t pay their full credit card bill on time often choose to pay the bare minimum. People with this card won’t be charged a late payment fee if they pay this small amount by the due date. It’s usually 5% of the total amount owed. Interest is added to credit card balances that are still open, even after the charges are paid off. The interest can go up to 49% p.a. You could get into a lot of debt if you only pay the minimum on your credit card bills. You shouldn’t just pay the bare minimum every month. You will have to pay very high fees if you do that. So, while you keep using many credit card benefits like SBI credit card airport lounge access, always avoid paying the minimum dues and aim to pay the full bill money every month.
You can pay off all of your debt with EMIs. Is it hard for you to pay off your full credit card balance? You can try a SBI cashback credit card balance transfer. You can also buy a lot of things on EMIs. You could sell investments that don’t give you much back for the same amount of money. You could also borrow money and use your long-term investments as collateral. It also won’t change how you plan to spend your money in the future. You pay a lot more in interest on your credit card than that.
Always using more than 30% credit limit
You can see how much of your credit limit you’ve already used by this number. You might be credit-hungry if you use more than 30% of the credit you have available. Check your credit report if this sounds like it. Your credit score will be hurt badly by this.
For example, if your credit card limit is Rs 1 lakh and your monthly card spends are like Rs 50,000, then your credit utilization ratio turns out to be 50%, which is higher than the ideal ratio of 30% which credit bureaus also prefer.
But still, if you go over this 30% credit limit a lot, you should either ask your credit card issuer to raise the limit or keep looking for a new card and apply for it so that your total credit card limit available gets boosted, thus pulling down your CUR. And yes it’s completely okay to do this as long as you don’t spend more after getting a bigger credit limit on your cards.
Not maximising the benefit of interest free/grace period
Most people who have credit cards don’t use the interest-free periods. Also, they don’t know how to use credit cards well. From the time the card was charged until it is paid off, there is no interest. It’s not interesting right now. You have until today to pay off your credit card bill. This time, you don’t have to worry about interest charges from the credit card company. You can use it to buy something. It could be anywhere from 18 to 55 days, but it depends on your transactions and bill cycles.
When your credit card billing cycle starts, buy big things with it to make the most of the time you don’t have to pay interest in the grace period/interest free period. You won’t have to pay interest on them for a long time in this period. If you have a lot of credit cards with different due dates, this can help you. If the interest-free period on the credit card the company gave you is too short or won’t let you change it, you should also look for a different one. Check back on your application often to see how it’s going and if it gets accepted.
Using SBI cashback credit card to get cash from an ATM
Credit card users often have money taken out of their accounts without their knowledge. From the time the money is taken out until it is returned, fees are added to it. Your bill will also include a fee equal to 2.5% to 3.5% of the amount you borrow. Charge cards shouldn’t be used when you need cash. Don’t forget that you need to pay back the loan in full as soon as possible to avoid fees.
You’re not getting your reward points utilized
You can call customer service or check your online credit card application to see what’s going on. Your reward points are the same way. People who have credit cards often use their reward programmes to get people to buy their products. You can get free movie tickets and use SBI credit card airport lounge access through these programmes. It doesn’t cost anything a year either. You can get gift cards, air miles, and other things for your reward points.
Credit card reward points lose their value after about two to three years. Remember this for when your SBI cashback credit card gives you points again. Remember that these reward points are no longer valid. They won’t help you as much as they would have if you used them on time. That means they should really read the rules of the credit card’s reward point programme before they sign up. They should also cash in their points before they run out.
