TOP 3 BIG MISTAKES ON CREDIT CARD which people often make - like paying minimum dues, overspending, and ignoring hidden charges. How to avoid these? Read the complete blog article here along with expert tips of 2025
Introduction
In today’s growing digital age, credit cards have become a common and powerful financial tool which is being used by every other person. Instant payment, cashback, reward points – everything is available in a single card. That is why credit cards are very much liked in today’s world.
But as our elders used to say, “With as much power comes responsibility.” Wrong use of credit cards can take you to debt trap, high interest, and bad credit score. Due to which you may have to face a lot of problems.
So let’s go, today we will know about the top 3 mistakes that people often make with credit cards – and how you can avoid them. And what can happen to us by making these mistakes, so read this article completely, you will get a lot of information from this article.
Mistake 1: Ignoring the due date
This is the most common and the most dangerous mistake – missing the payment on the due date.
- When you do not pay your bill on time: Know what happens
- Late payment charges are levied
- Interest rate increases automatically
- Credit score drops
- And many other things happen.
And a single late payment can be seen in your credit report for up to 7 years, due to which you may face a lot of trouble in taking out a loan or credit card.
How can this mistake be avoided?
1. Turn on Auto Pay: Through the auto debit facility of the bank, your bill will be deducted automatically on time, so there will be no need for us to pay it, but we just have to maintain the balance of the bill account in our bank account, the rest will be deducted by the bank itself from your account and will pay the credit card.
2. Set a reminder: Set an alert in your mobile or calendar 2-3 days before the due date, so that you will remember to pay the due and your payment will not be late.
3. Check statements: Read your bank statement carefully every month – to understand due date and transactions. This will give you a lot of information about your credit card and bank, how your bank and credit card work and what charges are levied.
- Benefits of making
- timely payment of credit card:
- Late fees will not be levied
- Credit score improves
- It becomes easy to take a loan
- Reward points and benefits are also maintained
Mistake 2: Using your full credit limit
What is credit utilization?
How much percent of the credit limit given to you are you using. Credit card limit is called credit utilization.
If you are using 80-90% or full of your limit, then credit card companies feel that you are financially dependent on credit. Which can spoil your credit score a lot.
How to control this?
1. Follow the 30% Rule: Do not use more than 30% of your total limit. Whatever it may be, you should set it in your mind that your limit is the 30% you have set.
Example: If your credit limit is ₹50,000, then use only upto ₹15,000. Don’t use more than that and always think that your credit card limit is only 15000 and not 50000.
2. You can request to increase the credit limit: If your usage is regularly high, then request the bank to increase the limit – but don’t increase extra expenses. Make only your necessary expenses and don’t incur unnecessary expenses at all and request the bank to increase your credit limit.
3. Make mid-cycle payment: Do not wait for the monthly bill – If you have spent ₹10,000, then pay ₹5,000 in a week – this will keep utilization ratio under control. So that you do not have to pay a large amount at once and your bill will be paid easily and your utilization will also be good.
Long Term Benefit:
If you keep credit utilization under control, then your loan approval becomes easy, you get low interest rate and your financial image becomes strong. As the bank starts trusting you well, then it also gives you credit cards and loan interest loans and many other offers.
Mistake 3: Thinking that credit card = free money
Many people think that credit card money is free. With this thinking, people keep spending without thinking and understanding, and then they get trapped in EMI, interest and debt. And they remain trapped in this and by the time they realize their mistake, it is already too late and then they always feel guilty about it.
How to change this thinking?
1. Make a monthly budget: Fix in advance how much you will use credit card and don’t cross it. Remember that don’t spend more than the amount you have fixed.
2. Treat it like a debit card: Use it only for essential things like grocery, bill payments or planned shopping. Avoid random online shopping and impulse buys. This can increase your budget which can put you in trouble.
3. If you cannot buy in cash, don’t buy from credit card: Ask yourself – can I buy this item in cash? If not, then stop. Don’t use credit until you have real money. This will help you manage your credit card better by thinking about your future.
Credit Card Usage Wisely the Advantages of
Cash back rewards, travel combination points, and a strong credit history are just some of the perks you might get when using your credit card wisely in a responsible manner. By relying on your credit card like a cash machine and stealing the benefits while remaining financially intact.
Credit Card Success Bonus Tips
If you want an even better credit card experience and make the most of your financial tools, add these tips as bonus points to your credit card relationship:
1. Optimal Credit Card
Not all credit cards are the same. To choose a credit card, think about the following:
The flexibility of Rewards: Find cards with rewards that you use for your spending, whether it be points, cash back, or even discounts on specific categories (grocery/bulk tip fuel,), etc.
Annual Fee: There are a lot of credit cards with hefty annual fees and for some people, the benefits return more tax deductible than in other places.
Interest Rates: Well, if you are just gonna take it out in the first place, then look for a card with a lower interest rate so you can pay less.
2. Read the Terms and Conditions
When you first get your hands on a credit card, make sure that you learn the nitty gritty of terms and conditions. Knowing if it is interest, fee, reward structure, and such will help you not be completely shocked at the end of the road. Key points to look for include:
Grace Periods: Learn how long you can defer payment before your bill starts to charge interest.
Foreign Transaction Fees: Know if your card charges high foreign transaction fees if you are going to be traveling a lot.
Bonuses and Offers: Look into Introductory rates or bonuses that are time-limited.
3. Employ Alert and Tracking Tools:
Some credit card providers let you keep tabs on how much you spend. Apply these functions to keep up with your money.
Spending Alerts: Get alerts when you have reached a spending ceiling
Most credit card companies have tools that will help you track your spending. If you want to keep your finances in check use the following functions:
Spending Alerts: You can enable alerts when you (or your spending threshold, take your pick). This is so you don´t spend your budget and always stay on top of it.
Payment Reminders: Enabling notifications for upcoming due dates means you will never have to miss a payment.
Credit Score: Score Some credit card providers give you a free score so check if that is one of them.
If you wait to check your score, you can see how you are doing and tweak things that need improving.
A Moment of Personal Experience: The Basics of Managing Credit
I have a great first-hand example of a credit card. I was hyped by how liberated it seemed to be, but like any good thing it left me dead in the water. I used it as if it was free, and the next thing I knew my account was awash didn´t know the difference till I got my first statement. And I felt so guilty, and fear. I learned that budgeting and taking care of your credit is a must-have. I started thinking of my credit card, my friend, who is a role tool rather than the runaway train with no brakes.
Now I smartly use my credit card, making sure to pay it in full each month and taking advantage of the rewards. Changing that perspective has done wonders for my financial wellness and allowed me to indulge in the pleasures of credit cards without the accompanying perfidy.
You will help lessen impulse buys and stick to your budget.
Promotional Offers: be aware of introductory rates or bonuses that you can’t use forever.
My opinion
My opinion is that you should always use a credit card only when needed and always keep checking your credit card statement and never use more than 30% and whatever expenditure you have to make, do it with planning and always make payment on time. When you do all this, you will see the result within 6 months. Your credit score will increase very well and you will start getting offers of loans and credit cards.
Conclusion
Credit card is a financial asset if used correctly. If used wrongly, the same card becomes the reason for your wastage. That’s why credit should be used with understanding and thinking properly, and that too is a risk.
Recap – Top 3 Mistakes to Avoid:
1. Missing the payment due date
2. Over-usage of credit limit
3. Spending free money without planning
If you avoid these three basic mistakes, then understand that your credit card usage has become 80% safe and you will get a lot of benefits from it in the future and you will be able to achieve a lot by using it correctly.
