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Why Your Credit Card Never Works Out the Way You Plan

Team Jar
August 2, 2022
Why Your Credit Card Never Works Out the Way You Plan

Credit cards can be a boon or a bane. If you know how to control them, they are the best. To know more of such credit card tips, read the article.

Credit cards are an amazing source of financial comfort. The list of credit card benefits is long enough to make anyone fall for them. You get amazing credit through it and don’t have to worry about anyone questioning you regarding your creditworthiness. 

Besides this, it also helps you raise your credit score! What else could you ask for? And what could go wrong? Quite a lot of things, infact.  

Let's take the opposite swing. Are credit cards really that awesome? 

Using a credit card is not everyone’s cup of tea. Credit cards are amazing as long as you do not surpass your credit limit, accumulate a huge balance of debts and repay the payments timely. 

If answers to these are not in affirmative for you, there is perhaps some trouble and you need to get it sorted out before it takes a leap on your financial stability. Credit cards are definitely a cool alternative to cash. 

They are convenient to use and can help you buy almost anything you want. Some of them give you additional perks, like travel miles or cashbacks. Others may give you some explicit protection on the purchases. 

Whatever it may be, credit cards were made for convenience, and credit card benefits offer nothing less than that. 

Here are 7 Exciting Benefits of Using Credit Cards.

However, when we consider the term debt, things start to take an ugly turn. If you are someone who is not very well versed in controlling your finances, credit cards can be a curse for you. If there is anything on the top-priority list of any credit card user, then it is definitely a big NO to carelessness. 

No, you can’t go on a reckless shopping spree. No, you can’t spend without keeping a proper track. You will have to keep doing the interest calculations every now and then- unless you have a backup strong enough to pay-off the hefty list of credit card bills. 

If you are already barely breathing inside debt, you must consider letting your sleek, rectangular friend go away- that is the safest credit card advice you can get.

Here is the list of some credit card tips for anyone owning or planning to soon own a credit card: 

1. Do not make late payments

If you own a credit card, the last thing you would want to happen is the imposition of high interest rates and other so-called delayed payment charges on you. Know when your payment is due- set in reminder for a ‘just-in-case’ and never default on them- you must follow this credit card tip. 

First, you would not want these to bore a hole in your pocket. Second, you wouldn’t want your credit score to go down or your credit history to turn a red alarm. Therefore, it is very important to repay your balance on time. 

Must Read: Find out 6 Sure Shot Ways To Pay Off Credit Card Bills Fast

2. Credit card limit- stay within it, never trespass

This is one of the most common mistakes that any new credit card user makes. The best credit card advice is that if you know that you don’t have enough money to make credit card payments, you shouldn't be using it. At least, you should never ever opt to exceed your credit limit in such a case. 

This is because the credit card issuer company will not forbid itself from imposing an over-limit fees. This can take a toll on your finances and won’t be great for your financially secured future.  

3. The urge to avoid reading the terms and conditions section? Read them irrespective. 

At the time of issuing your credit card or after the approval of your application, banks/companies generally give you a document containing certain terms and conditions of that particular card. They are bound not to hide anything from you and keep the process transparent. 

While using a credit card, you must know that there can be no hidden fee attached to your credit card. Make sure you go through the terms and conditions carefully and see if it is what you exactly want. 

If they don’t fit well with your expectations, don’t be scared to switch to some other card or some other bank altogether. You must have control over what you’ll be paying later on.

There are millions of consumers who find it hard to keep a track of their credit card related payments. If you are one of them, you must at least consider skimming through this article to get some credit card advice to get your credit card working the right way for you. 

Here are the top 4 credit card mistakes that almost everyone makes; make sure that you don’t:

1. Payment of balance to the maximum

If you are currently going through financial stress, you are most likely to just pay the minimum balance on your credit card monthly. It seems fair as you don’t really want to lose out on money. However, it will eventually be of no help to you. 

With interest rates as high as 5% that the credit card companies can charge you, every month you will be under more and more pressure. What you can do instead is pay the maximum that you can at once. It sounds ridiculous, but in practice it isn't. 

Here’s the catch: You pay to the maximum limit and reduce spending on unnecessary areas. What eventually happens is that you come out of debt pretty soon. It may seem like you are just spending with no savings, but here’s where interest rates come into play. 

If you pay an extra 1000 rupees today, in future, you’ll receive them back through interest rates. You may even save around 10% to 29% on next year’s payment!  

2. Using credit cards for spending on everyday items- don't do this.

Another trap to step into is using your credit card for everyday purchases. It is very important to keep a track of your credit card expenses. A simple credit card tip is that it is a nice option to cut out things like groceries or utility bills off your credit card expenses. 

You will find it easy to track your spending and eventually pay-off your debt sooner. So, wherever you can switch from your credit card to cash/debit card/cheque, go for it! 

Imagine buying a packet of milk for Rs. 30 and at the end of the month, paying Rs. 35 instead. You wouldn’t want that, would you? Therefore, keep all the unnecessary expenses out of your credit card credit limit.

3. Not everyone needs credit card rewards- get your priorities in line.

Using a credit card just to earn a discounted dinner at a high-end restaurant is truly not worth it. Credit card rewards aren’t that amazing if you pay close attention to the way they work. Companies usually tempt you with cashbacks, say for Rs. 50, but in order to earn that, you'll have to earn reward points. 

Even if you get one reward point for each rupee that you spend, you will be spending more than required to land the highest bonus possible. 

Paying even around 2% interest on your outstanding amount won’t be a smart trade-off for you. So, skip the run behind these too-good-to-be-true rewards and shift your focus on paying off the debt instead. 

You must keep an eye on this credit card tip. 

It might be possible that you get offered to buy an additional card just to earn bonuses. But if you know that you’ll eventually find it impossible to make timely payments, you mustn’t fall for these tricks. Additional cards come with additional responsibilities. So take them at your own risk! 

Read more: 8 Things That Will Happen If You Don't Use Your Credit Card

4. Avoid cash advances- one of pro credit card tips!

Taking a cash advance from credit cards is more dangerous for your financial health than you may know. This is because the interest starts to accrue almost immediately, unlike other credit card purchases. 

On the amount of your cash advance, you will be liable to pay interest that can run as high as 6% and that too with no grace period. You will get automatic bills and to add insult to injury, you don’t even get to pay them right away unless you have completely paid the balance on your regular purchases. 

Therefore, don't hesitate to say a big NO to cash advances if you aren’t already savvy in using credit cards. 

These credit card tips aren’t hard to follow. Not everyone has the same purpose with a credit card. When buying, you must know what you are actually investing into. 

If your priority lies in travelling, pick a card that involves minimum foreign transaction fees or gives you amazing travel miles- know your priorities and then pick. If you are stuck with a credit card that doesn’t save your finances but does the opposite, you must follow this credit card advice

If you are looking for an easy platform to make investments in digital gold or are unaware of what to do with your spare change, download the Jar app today. 

With its eye-appealing and pocket-friendly interface, Jar lets you dive into the investment and saving world at your own pace and needs.