You might be using a credit card for a long time, but you don’t necessarily know how to use it in the correct way. Some credit cardholders use their card responsibly from the very beginning of their credit journey, but some of them don’t exactly know the correct way of using a credit card. Getting a credit card and making transactions through it is not enough, there are a lot of additional things that you need to keep in mind. If you have been using a credit card for a long time but your credit score isn’t increasing, you are probably making some mistakes unknowingly. Using credit cards wisely seems to be a simple task, but it is not really that easy as your credit profile may get affected even when you delay your payment just by a few days. In this article, we are going to discuss what are the signs indicating that you are using your card in an incorrect manner.

Signs of Incorrect Usage of Credit Cards

The following are some of the most significant signs indicating that a cardholder isn’t responsible enough to handle a credit card. You must go through them and if you are doing any of the following things, you should try to avoid them:

Delaying Credit Card Payments

If you are missing your credit card payments, again and again, you are not using your credit card in a good manner at all. Making timely payments of your credit card bill is the most important thing to be done to maintain a good credit score. It doesn’t only affect your credit profile badly, but you may also get trapped under unmanageable debt that leads to poor financial health. Sometimes you may forget to pay your credit card bills and to avoid this, it is best to set reminders or set up autopay for your credit card bills. Many people also take advantage of credit card management apps like CRED to keep track of their bills.

Paying Only The Minimum Due Amount

Many credit cardholders believe in only paying the minimum due amount every month as they can avoid late payment charges by doing so. Every credit card user needs to understand that the minimum due amount is not the only amount that you need to pay, you have to pay the full outstanding balance on your card. The facility of the minimum due amount is just for the convenience of cardholders and they can use it when they are unable to pay the full due amount for some reason. One can just avoid the late payments payment charges by paying the minimum amount, but the interest charges will still be applicable to the rest of the amount. So, if you are also paying only the minimum amount every time, you should stop doing this and try to make the full payment each month.

Exhausting Your Entire Credit Limit

If you have ever done research about factors affecting credit scores, you would surely be aware of the fact that the credit utilization ratio plays an important role in building your credit score. It is not advisable to use more than 30% of your credit limit, but a few cardholders are unaware of this fact and they tend to utilize their full credit limit each month. Even if your credit limit is lower, you should try to maintain a utilization ratio of less than 30% so that you can build a good score and as a result, you will automatically be approved for a higher limit. So, you should try not to utilize more than 30% of your total credit limit until and unless there is a real emergency.

Increasing Interest Rates or decreasing Credit Limit

If your credit card issuer has increased the interest on your credit card, it indicates that they consider you a risky borrower. This is also a sign that you are not using your credit card correctly. You might have missed some payments or spent beyond your credit limit or there might be some other reason, but you should take it seriously when your card issuer takes such actions against you. If you ignore the increasing interest on your card and keep making the same mistakes, your card issuer might cancel your card in the future. Moreover, if your credit limit has been decreased, the reason might be the same here as well. So, if any such things happen to you, you should find out your mistakes and try to avoid them in the future.

Withdrawing Cash Using a Credit Card Very Often

The cash advance facility is provided by card issuers for emergency situations, but some cardholders use it very often. You should be aware of the fact that there are high fees associated with cash withdrawals using a credit card and you don’t even get an interest-free period for these transactions. You can obviously withdraw cash using your credit card when you don’t have any other option, but it shouldn’t be done regularly. you should try to avoid cash advances as much as you can.

Bottom Line

Using a credit card responsibly is very important as it helps you build your credit score, which plays a huge role in the approval or rejection of your credit applications. Making timely payments is undoubtedly the most important thing, but it is not the only factor affecting your credit profile. As mentioned above, there are many more points that one needs to keep in mind in order to keep their credit journey smooth and hassle-free.

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