5 Mistakes You Must Avoid While Using Your Credit Card

5 Mistakes You Must Avoid While Using Your Credit Card

I hope you have a credit card for sure. Many banks are providing free credit cards.

You know one thing, the usage of credit cards has increased up to 50% in the last five years. There are 2.64 crores credit cards are in usage currently. After this demonetization in India, the usage of credit cards has also increased slightly.

Though many of you have debit cards, we tend to use credit cards along with them without knowing the mistakes we commit when using them.

One and Only Credit Card

Credit card is only for very emergency purposes. Generally, for various shopping activities, your Debit Card is enough. You can have one or two credit cards along with your debit card, but not more than that.You must remember that you have to pay your dues on credit card within a specific time.

If you want your family members to use your credit card, it is better to get Add-on card for your credit card rather than getting another credit card. Think well!

Also Read: A Case Study: Will Provident Fund enough for your Retirement Needs?

The Credit Limit

You should have certain rules while using your credit card. You should not get addicted to the 50 days credit limit, reward points, cashback offers and other benefits of using your credit card.

The very important thing in credit card is the credit which they give you to spend. It is around 2 lakhs to 3 lakhs for professionals. It is advised to have only the balance money you have after spending for a month as credit limit. For example, if your salary is Rs.25,000 per month and you have Rs.5,000 saved after all expenses, then the optimal credit limit for your card is Rs.20,000. If you have very high credit limits, then you need to spend carefully.

Linking Your Credit Card

Don't link your credit card with any of the online services or wallets. Because, when you spend via debit cards, you know how much money you have in balance. But when you spend through credit cards, you don't know.

If you have more credit limit, due to your interest in shopping, you will spend more money unknowingly. Later you will fall in the trap of liabilities.

If you want to link, then link your debit cards. So that you will be cautious on how much money will be deducted and how much you have to spend after that.

Using Credit Card at ATM's

Do you know one thing? The debt interest and the service charges for credit cards is higher if you use it to withdraw money from ATM than using it to purchase things.

Don't use your credit card to withdraw money from ATM. Even if you do so, repay it within the 50 days time gap. If you fail to do so, you would end up paying extra fine and high interests for that withdrawn money.

Say NO to EMI

Most credit cards offers to convert the debts into easy EMI's if you spend more than Rs.2,000. But it is a very wrong move. Because, when you buy 3 things, say, for Rs.5,000, Rs,6000 and Rs.7,000, you can still convert these three spendings into easy EMI's of 3,6,9,12,24 months. What happens here is, you tend to choose the highest month EMI (like 24 months) as you will be paying very low EMI every month. But, you will end up paying only EMI's every month and you can't come out of your debt. It's advised to choose the lowest monthly EMI or the best option is to avoid EMI.


Having a credit card or not using a credit card is a decision which you must take. Use wisely knowing the risks of using credit card, so that you don't fall in the trap of debt.