Is Your Credit Card Bad For You?
Are you in a bad relationship with your credit card? Does it not truly understand you? Realizing your card is bad for you can happen to anyone as most people don’t give much thought to the card they apply to early on – but everybody has different spending habits and lifestyle. If your spending is not in line with your credit card then you might be wasting your time with that credit card which does not understand you. When we say that a credit card is bad, we actually mean those credit cards that do not match you according to your financial habits. Some red flags that might help you in discovering that your card is bad are:
- If you are carrying a balance on your card which charges high rates of interest, no matter what benefits, rewards, and features it offers, you might be on a wrong track vis-a-vis your credit score. First, it’s best to never carry balances in your credit card. The smartest route is to use your credit card like cash, never spend more than you can afford, rack up plenty of rewards points and benefits – then simply pay your bill at the end of the month. However if you do occasionally need to carry a balance, obviously choose a great card for your lifestyle which charges the minimum rate of interest per annum. If you still carry on with your old card, you might be setting yourself up for a big problem in future.
- There are some cases where customers pay an annual fee, which equals more than the rewards that the card pays out. One should not fall in love with a card solely for the benefits and rewards it promises, the purpose here is give yourself a net-gain. If you are spending freely without doing your mathematics of rewards and benefits the credit card offers you, you might be with a bad credit card.
- Usually, frequent fliers go for travellers card, which rewards with miles and points that can be redeemed in future bookings. You might be paying your dues in full and on time but won’t be able to use those benefits. It can leave wondering what to do of those benefits that are redeemable on flights. In case if you are not able to use your points and miles then you’re with a bad credit card. The same goes for card offering rewards points for merchandise or discounts. If you do not plan to use them, or have no interest in the rewards than what you need to do is to opt for a credit card that gives you rewards in the form of cash backs or bill statements credits. This is essentially free (FREE!) cash simply for swiping your card to pay for something. Effectively a permanent discount on anything you buy, anywhere. This will help you more if you don’t want to play the points game.
There are plenty of fish in the ocean of credit cards! First analyze yourself, what you buy, where your most likely to use your card. Then find a card that rewards you for doing just that! If you need help finding a card, you can certainly read our past reviews and stay close to our site as we post reviews of India’s credit cards each week.
CreditSmart CIBIL Score Tips:
- Find credit errors on your CIBIL report and correct them. Many times we don’t analyse the reports to improve it more and just focus on the score. You should analyse the report and check out what is making your credit bad and fix it as soon as possible.
- Be careful in watching your negative accounts. You should be aware of your negative (debit) components of your account, as even in the cases of debt fall off; the lenders can sue you and can fetch their money. Be careful and watch your finances wisely.
- You can use your credit strategically to keep you at a good standing. As a matter of fact, positive information on your report stays for 10 years. So your negatives can be well hidden in presence of those positive credits. In presence of bad credit, if you have loans which are at a good standing, you can utilise them at your advantage.
A smart tip is to never pay your dues early on time when you intend to build your credit history. This is because, when keeping loans active with a positive payment trail although the end of the term, will help your credit in the longer run.