One common misconception is that using a credit card starts a never-ending debt cycle. The main culprits in debt, whether intentionally or unintentionally, are those who use credit cards to make rash, costly purchases and then neglect to make the payments. People who use credit cards frequently make decisions that could make it harder for them to continue living the way they currently do because they lack product knowledge.
If you want to maintain stable finances and avoid debt, you should never use your credit card for the following purposes.
Keeping the credit utilisation rate constant at 30% or above
The percentage of your credit limit that has actually been used is known as your credit card’s utilisation rate. In the same way that you check your credit score on a regular basis, you can also check the SBI credit card approval status.
Remember that credit bureaus have the right to deduct points from your score if it rises above this threshold. Customers who use credit more than thirty percent of the time are often perceived by lenders as being credit-hungry.
Your suggested credit card spending limit should be 30% of your credit line maximum. If you frequently go over your credit limit, you should apply for a second credit card or request an increase from the company that issued your current credit card. Even if you do not increase your credit card expenditure as a result of the increase, using credit cards to raise your overall credit limit will lower your credit usage ratio.
Paying the minimum amount due on a regular basis
Many SBI prime credit card users erroneously think they can avoid financing costs by just making the minimum payment necessary. There will still be significant finance charges applied to any past-due debts, with rates ranging from 23% to 49% yearly. Even if the cardholder could have prevented these costs by paying the minimum amount due on time, he is still responsible for any late fees and any damage to his credit score. On any subsequent credit card transactions, interest will be assessed if any balances are not paid in full at the time of purchase. Unpaid amounts will remain unpaid until they are.
What to do: You might want to think about spreading out the remaining amount over a few months if you find it difficult to pay off your credit card debt all at once. The loan terms for these EMI conversions range from three months to five years, and the interest rates are significantly lower than those of financing. Your credit card account will be fully paid off because the interest rates are substantially lower and the monthly payments are smaller. If you would like to know whether your credit card application has been approved, you can also request a balance transfer and monitor the SBI credit card approval status for that request.
Disregarding the expiration dates on reward point usage
Depending on the credit card’s reward point programme, points earned through purchases can be redeemed for a range of products, such as gift cards, airline miles, purchases at specific retailers and/or online partners, balance deductions, and more. The majority of credit cards, however, have expiration dates for reward points that range from two to three years. Reward points that are consistently valid with credit card companies are typically not offered. Verify your SBI credit card approval status after applying to make sure your reward points haven’t expired or been misplaced.
What to do: Cardholders should always be aware of the various terms and restrictions related to their redemption of reward points as well as the expiration dates of the points they have earned in order to ensure they don’t miss out on the benefits of using their credit cards. They may be able to maximise the value of the reward points they have already accrued by doing this.
Maintaining your credit limit rather than raising it
Raising credit limits can be difficult for some credit cardholders because they fear going over their spending limit and getting caught in a never-ending debt cycle. An increased credit limit, however, can significantly help your overall financial condition if used wisely.
The best course of action is to accept credit card companies’ offers to quickly raise your credit limit. By enabling you to use your SBI prime credit card for larger or unforeseen purchases, raising your credit limit can help you become a better money manager. A larger credit limit will not only increase your credit limit but also improve your credit score, lower your credit utilisation ratio, and increase your eligibility for future credit cards and loans.
You can request that your current card issuer increase the limit on your account if they haven’t already. After that, you can use the SBI credit card approval status feature to find out the current status of your credit card application or request.
Utilising a credit card to withdraw cash
For credit card withdrawals, the maximum cash advance fee is 3.5% of the total transaction amount. From the moment the money is taken out until it is returned, additional financing expenses are incurred.
Making every effort to restrict the amount of money you withdraw with your SBI prime credit card is the best course of action. If at all possible, give back all of the money that was taken out. You can reduce the additional interest payments associated with loan fees by doing this.
Now that you know the bad credit card habits to avoid, it’s time to educate yourself on the different types of credit cards available.
Co-branded cards, secured cards, cashback cards, reward, lifestyle, travel, and premium cards are just a few of the numerous credit card options available.
Which credit card is the best?
Well, there isn’t a method that works for everyone to figure out which card might be the best. Everything will be determined by your needs and financial objectives. A travel credit card might be the best choice for you if you travel frequently. It may be simpler for you to obtain a secured SBI prime credit card if you have already deposited money with the bank that offers them. In the same vein, you might want to consider applying for a rewards or cashback credit card if you shop online on a regular basis.
