COVID-19 lockdown: Common credit card mistakes to avoid
In today’s time credit cards are essential for easy transactions and quick access to funds. It is a card that enables payment based on promise that the cardholder will pay the card issuer (usually a bank) the amount and other agreed charges. The bank grants a line of credit to the cardholder from which they can borrow money. It acts basically as advance cash. However, just like every other aspect of our lives we need to rethink about how we use our credit cards during the ongoing coronavirus pandemic. Here are a few common mistakes that you can avoid in the times of COVID-19:
Ignoring Your Bill : Since you haven’t used your card in past few months because of the lockdown, ‘ignoring your bill’ might seem an attractive option. However, you should not be lured as the monthly interest at the rate of 3%-4% will pile up on outstanding dues and fresh purchases. Thus, you will regret even ignoring these negligible bills in future.
Not Redeeming Reward Points: Every card issuer gives some reward points on using credit card. Some might offer you one or two points for every ₹100 spent or maybe 20-40 paise for every ₹100 spent. If you haven’t made any significant purchases in recent times then you might not have many points to redeem as of now but if you have accumulated points then you should redeem it before it expires. Use these points for necessary expenses and save some money.
Spending Money On Non-Essentials: Since a lot of e-commerce websites have resumed delivering non-essentials in Lockdown 4.0, you might have the urge to go on a shopping spree to make up for past few months. However, you should avoid doing it as unplanned expenses leave a huge scar on your finances. Avoid overusing the limit of your card and spending unnecessarily.
Misplacing Your Card: Due to lockdown you are mostly at home and the chances of losing your card are low but if you lose track of your card then getting a replacement may take longer than usual due to absence of proper backup services.
Falling Prey To Fraud: New COVID-19 related phishing apps and malware to attract customers have emerged due to the ongoing pandemic. You should be careful and think twice before sharing you card details. Also, it is suggested to use credit card instead of debit card in such cases because it is easier to recover losses due to fraud on credit card.
Opting For Moratorium: Credit card bills count as unsecured loan and since Reserve Bank of India announced three-month moratorium on loan repayment in March, you will not be required to pay anything for three months and the banks won’t charge any late payment charges. However, the interest will pile up on outstanding amount. By the end of three months you will have to pay a hefty amount.
Credit cards are essential but should be used with caution. We hope that you will avoid making the above mentioned mistakes.