If there is one thing that can be found almost everywhere and in great abundance, it is free advice. People all across the world offer unsolicited advice all the time to everyone. Sometimes it is to appear learned, other times it’s just a means to show that they care. But this activity becomes venomous when this advice is taken in a wrong way or is misinterpreted. It starts causing more harm than benefit. Especially when there is money involved. When it comes to credit cards, we have come to a few “pieces of advice” that we realized, were more of a double-edged sword. Even though they are brilliant, if you are not careful enough, they might actually tear your credit score apart. Pay close attention to these bits of advice and try to understand what they truly mean-
When you keep multiple credit cards, you come across as a versatile borrower. If these credit cards are of different benefit type, you can enjoy various discounts, cash back and offers. If the billing cycle of these credit cards is different, you can enjoy the grace period for all of them and make the most of the “interest-free” duration. Now before you go strotting around getting as many credit cards as possible, one thing you should remember is that you need to MAINTAIN these credit cards to enjoy the benefits. If you do not pay your dues on time, your credit score might be affected adversely.
The world is divided into two types of people- one who recommend using credit cards for everyday expenses and the others who swear that nothing good can ever come out of it. Using your credit card for daily expenditures is a matter of responsibility and diligence. If you are responsible enough to not forget the fact that it is you who has to pay for the expenses you are making right now, you can definitely use a credit card for your everyday expenses. On the other hand, if you are someone who doesn’t feel a thing before handing out the card because it doesn’t “feel” like spending then maybe you should hold your horses.
This is an incomplete statement and a commonly misunderstood one. What people wish to convey when they say this is- “ do not use the entire credit amount that you are entitled to”. But what people hear is “pay only minimum balance”. Fair warning: Paying only minimum balance is inviting the debt vampire into your house. It will suck the money out of you. Another fair warning: Using the entire credit that you are allowed to have will increase your credit utilization ratio and will definitely bring your credit score down.
A credit card that offers benefits in all spheres? What could be better than that, right? Actually, wrong. A credit card that offers you multiple features might be less useful than having different purpose specific credit cards. For example, your overall credit card might offer you a 15% discount on common expenses. But a travel credit card might offer you huge stay benefits, ticket benefits. Plus if you have a credit card suited for online shopping, then you can actually save much more than you would with your “multipurpose” card. Analyze your lifestyle very carefully before you choose a credit card for yourself.
Now that you know what are to take care of while using credit cards, we hope that you will imbibe these credit card bits of advice in a way they were meant to be taken. If you still have any questions about how credit cards affect your credit scores, do let us know in the comments below. Until next time!