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6 Healthy Credit Cards Habits You Should Develop

To avoid debt cycles with credit cards, here are some tips to follow.

6 Healthy Credit Cards Habits You Should Develop
Credit cards are one of the most popular financial instruments which used rightly can reap you great benefits. However, if irresponsible habits kick in with credit cards, it can lead to mounting debt.

To make sure that you never fall into such debt cycles with credit cards, here are some tips to follow.

Balanced Credit Utilization

Overutilization of your credit limit can lead to a harmful habit of spending more than you can afford. Overshooting you limit may also take your credit card score low. You should ideally not use more than 20 per cent to 30 per cent of your credit limit and make sure that you clear the entire credit card balance, else it gets carried on to the next statement thus reflecting poorly on your credit utilization again.

Avoiding Cash Withdrawals

Credit cardsalso allow you to withdraw cash from ATMs and while there's an interest-free period for all other credit card transactions, the interest rate applies immediately for such withdrawals. This option should be exercised only in emergencies and make sure to repay it as soon as possible to avoid the hefty interest rate.

Pay the Full Amount Due

Most credit cards do not charge any interest if you pay the amount owed within an interest-free period, which is typically 40 to 50 days. However, they also give an option to pay a minimum balance owed, generally 5 per cent of the due amount. This option should be sparsely used only when in emergency need as you could end up paying hefty interest. Constant payments of only minimum balance dues, will only make you pay more and more interest, so make sure to clear the pending amount as soon as possible.

Avoiding Late Payments

A late payment on your credit card bill can be disastrous in many ways. Firstly, your credit score gets affected, and secondly you have to pay a late fee each time you are late in paying dues. While some banks charge a standard late fee, some charge a percentage of the amount due as late fee. Some may even charge an additional fee if ECS for the credit card payment gets rejected. In case you don't have the full amount to repay your card, make sure to at least pay the minimum amount due, in order to avoid the late payment penalty.

Monitoring International Transactions

If you visit international destinations frequently, whether for work or holidays, make sure to get a credit card with low transaction fees. Additionally, make sure to carry cash for longer stays or a travel card with no transaction fee for POS swipes as frequent swipes on your credit card can add up to a heft bill of transaction fees.

Changing PIN Frequently

Cybersecurity threats always loom over your financial instruments. Credit cards are vulnerable to misuse. Your card information stored online can be used for fraudulent transactions, both offline and online. Make sure you change your PIN frequently and use trusted sites only for payments in order to avoid facing such frauds.

(Adhil Shetty is CEO of

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