Less Use Of Credit Cards Is Beneficial

By | April 11, 2022

Credit card issuing banks are willing to raise your credit limit at any cost and release your hand more. Being the easiest option to pay money is just as easy to use up to a credit card limit. But using a maximum credit limit or a high amount can sometimes be a problem. So, you need to use only 30% of the sanctioned limit and pay it within the stipulated time limit. Do not increase your credit limit under any circumstances.

Hema Patel was furnishing her new house. She wanted the best out of every electronics item on the market. So, he continued his purchase. Where he got those things in an amazing EMI plan. Seeing this, he started buying it and without knowing its maximum limit, he bought all three of his cards to the maximum limit.
Hema’s trouble had now begun. Because, ahead of it is a long schedule of full payments. And if he forgets a single payment, he will be under great pressure of interest. It is very difficult to pay the entire amount during the payment limit.

Just like Hemani, you have a good idea and are thinking of paying your entire amount when your next month’s salary check arrives.  So, the fact is, there are many periods in your life in which you need to pay money. Whether or not you have to pay a lot of bills, your service may be cut off. In addition you have to pay for facilities like meals, transport etc. Otherwise, you cannot live. So, your next paycheck already has a lot of pay pressure already. So, it is not possible to pay the entire amount on the due date. And putting it in a debt cycle will annoy you with high interest rates.

Your CIBIL Score Will Drop

The ratio of credit limit against credit card balance is known as credit usage. So, the ratio of proper credit consumption is only 30 percent. Once this limit exceeds 50 percent, it can be considered an alarm for you and then start lowering your cadet score. The more you go to your maximum credit limit, the lower your credit score will be. Also using the maximum number of cadets in a single credit card can lower your CIBIL score.

Lenders Are Also Concerned

If you apply for a loan, the lender will look at using your credit card first. If your credit usage is more than 50 percent of the total credit, the lender considers you a risky customer. He may refuse to give you a loan or you may have to pay higher interest against the risk.

Stop Paying High Interest

You also make the bank and its shareholders happy by making maximum use of the credit card but most of the people fail to repay it within a certain period of time by using the credit limit more and more. E.g.  Free credit period. This means that you are willing to pay a very high interest rate for your outstanding balance. Sometimes these interest rates range from 36 per cent to 45 per cent. Which puts too much pressure on your payout.

You Can Get Into Trouble By Increasing The Debt Trap

By carrying this type of debt burden you easily fall into the debt trap. At such times keep away from debit card expenses until every debt is paid. So you can avoid paying very high interest rates. Also, pay as much as you can each month. Because, paying less will increase the pressure of interest on you. You can also take an interest-free loan from a friend or family to pay off a credit card. Plus, you’ll be getting rid of clutter you don’t need.

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