5 Red Flags That Show Incorrect Usage of Credit Cards

The function that credit cards play in your life, whether as a blessing or a curse, is totally dependent on how you choose to use them. In the right hands, they can give a wide range of benefits and even help you get out of a financial jam if you utilize them wisely and with discipline. If you make poor use of your credit card, you may find yourself trapped in a debt cycle, subject to steep fees and penalties.

Below are some critical indicators that you are misusing SBI Simply click credit card.

Rolling over credit card debt every month by paying the minimum due

A common solution for credit cardholders who are unable to fully return their credit card bills on time is to elect to pay only the minimum amount due on their credit card bills. As this amount is often 5 percent of the entire outstanding amount, paying only this bare minimum amount by the due date prevents cardholders from being charged a late payment fee on their account. On the other hand, the remaining balance on the credit card account continues to accrue interest in the form of financing charges, which can reach as high as 47-48 percent p.a. in some cases.

Furthermore, becoming accustomed to paying only the minimum amount due on your credit card debt can be a warning sign that you are on the verge of falling into a debt trap because this practice of rolling over your SBI simply click credit card debt by paying only the minimum amount due each month would result in hefty fees in the form of high finance charges.

Consider options such as the conversion of the total outstanding balance amount into EMIs, credit card balance transfer by applying and checking SBI credit card application status, or having large purchases converted into EMIs in the event that you are having problems repaying your credit card debts in full. 

You could also consider liquidating your low-yield investments to pay off your credit card debt, or you could leverage your long-term investments by taking out a loan against securities, as the associated interest cost is significantly lower than the finance charges levied on credit cards and your long-term financial objectives are not jeopardised.

Keeping the credit utilisation percentage above 30%

This ratio refers to the percentage of your overall credit card limit that you have used up to that point. Remember that credit bureaus typically regard a credit usage ratio of greater than 30% to be an indication of credit hungriness, so keep your expenditures within this range. Credit bureaus have the authority to lower your credit score by a few points if you exceed this threshold. If your credit utilisation ratio tends to exceed this threshold on a regular basis, you should either seek an increase in your credit limit from your card issuer or consider switching to another SBI simply click credit card by applying for it and then, from time to time checking SBI credit card application status. If you don’t increase your spending after receiving a credit card with a higher limit or an additional credit card, you will be able to minimise your credit utilisation ratio.

Letting interest-free period go wasted

Missing the opportunity to take advantage of the interest-free time offered by sbi simply click credit card is another component of smart credit card usage that the majority of cardholders fail to take advantage of. The interest-free period is the time period that elapses between the date of the credit card transaction and the date on which the payment is due. During this time period, the credit card issuer does not charge interest on your transactions as long as you are able to settle your total credit card balance in full within the specified time frame. Most of the time, this period varies anywhere from 18 days and 55 days, depending on when your transactions were completed.

In order to make use of this interest-free period to the fullest extent possible, you should plan your significant credit card purchases to occur at the beginning of your billing cycle in order to maximise the number of interest-free days available to repay them. In contrast, if you have many credit cards with varying due dates, you might consider spreading your transactions across them such that the majority of your transactions occur at the beginning of each card’s payment cycle. Also, if you’re current credit card issuer provides a shorter interest-free period and/or refuses to change and elongate it, then apply for another credit card with a longer interest-free period and then keep checking the sbi credit card application status to stay updated on the process and approval.

Withdrawing cash at ATM from a credit card

Another common blunder that consumers make when using their sbi simply click credit card is withdrawing funds from their accounts. Not only are such withdrawals subject to a cash advance fee of up to 2.5 percent -3.5 percent of the withdrawn amount, but they are also subject to finance costs from the date of the withdrawal until the date of the repayment of the money. As a result, withdrawing cash with a credit card should always be considered a last choice. And, if you find yourself in this situation, make sure to refund the entire amount you have borrowed as quickly as possible to prevent accruing financing charges as well as a cash advance fee.

Making your reward points expire

Just like you remain updated on SBI credit card application status by checking it online or contacting customer care, you have to stay updated on your reward points too.

Aside from promotional incentives like annual fee waivers, complimentary airport lounge access, free movie tickets, and so on, one of the most significant advantages that credit card issuers emphasise while promoting their products is the existence of rewards programmes. Upon accumulating reward points, you can redeem them in a variety of ways, including conversion into air miles, gift certificates, and other merchandise.

However, while using your credit card and earning reward points, keep in mind that most credit cards have a predetermined expiration period for these points, which is usually between two and three years. Once these reward points have expired, you will be unable to redeem them and will therefore be deprived of the benefits that would have been available had they been used in time. As a result, they should carefully review the terms and conditions of the credit card’s reward point programme before enrolling, and they should make sure to redeem their points before they expire.

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