5 mistakes to avoid When using a credit card for the first time

New Delhi : Getting your first credit card is quite a notable moment in life as it offers a new level of financial freedom. With the ability to convert certain purchases into EMIs, get rewards and enjoy cashback, you may feel empowered with a credit card.

Certain kinds of credit cards also allow you to withdraw cash in an emergency. What’s more, you can build your credit score by using a credit card wisely.

However, as a newbie it is also important for you to be aware of the common pitfalls that come with it so you can use it to boost your financial health in the long term. Here are common mistakes made by first-time credit card users and how you can avoid them.

Selecting an unsuitable credit card

Each credit card has a different set of benefits to offer you. By choosing a card that doesn’t reward you for transactions that you make regularly, you lose out on savings.

For instance, if you dine out regularly, but don’t drive, choose a card that offers cashback and higher reward points at restaurant partners rather than a fuel credit card.

Once you know which credit cards you are eligible for, compare their benefits before you sign up. You can do this with ease on platforms like the Bajaj Markets App, which offers some of the top cards from reputed issuers.

By being well-informed about each card’s unique benefits, you can get the most of the one you finally choose.

Ignoring your credit score

Relying on your credit card to help you build your credit score is a good habit to inculcate. However, you should actively check your score every 3-6 months. This way, you will understand the habits that help you boost your score and those that cause it to drop.

By not monitoring your credit score as a new credit card user, you will remain unaware about the factors that determine responsible usage.

From paying your credit card bill on time, to ensuring you don’t use your full credit limit each month, there are many moves that will help you increase your score and vice versa.

Failing to pay the full balance in one go

While you can pay only the minimum amount due when you get your credit card bill, this is something you should avoid. While you may not know this, issuers charge an interest on the unpaid amount.

Over time, this interest can accumulate into a substantial debt as credit card interest rates are usually high. To avoid this trap, ensure you swipe your card judiciously based on a pre-planned budget so you can repay your bills on time. This will also help you build a good credit score!

Delaying your credit card bill payment

A common mistake to steer clear from is not paying your credit card bill on its due date. This has many repercussions such as:

·         Late payment charges

·         Daily interest on the amount due

·         Lowering your credit score

Make sure you pay the bill on time by knowing the due date and either setting a reminder or choosing an autopay option.