There has been an on and off discussion on whether the plastic money in the name credit card is a boon or a bane. Credit cards have undoubtedly made our life quite easy by providing credit instantly and helping us with liquidity mismatches. There are several banks and other financial institutions that provide different types of credit cards, each with a range of benefits such as cashback, reward points, and more. However, all of these come at a cost. Since money borrowing has never been so easy before, credit card holders often land into a debt-trap, a low credit score, or are rendered ineligible for various exceptional benefits of their credit cards. Know more about some best credit cards available in the market to get the best out of it.
With organizations going for pay-cuts and an increase in expenses due to inflated prices, there are a few things that the cardholders need to avoid during the pandemic COVID-19 crises. We need to be careful about these mistakes to safeguard our bankings and get through this pandemic not with loads of debt and financial worries but with a stable financial condition.
5 Credit Card Mistakes to Avoid During COVID-19 Crises
1. Availing Moratorium: The Reserve Bank of India has announced a three-month moratorium on the payment of all term loans that were due between 1 March and 31 May. This notification also holds applicable for credit card bills as it is also an unsecured loan. This means that if the cardholder applies for a moratorium on his credit card, he will not have to pay any late payment fee even if he does not pay anything for the 3 months. The cardholder won’t have to pay even the minimum due amount for this duration. This having said, banks will still levy the interest on the outstanding amount. Also, in case a new purchase is made in this period, the interest will start accruing immediately. Thus the cardholder will eventually have to pay a hefty amount as the interest on the outstanding bill. Therefore, it is advisable not to opt for this moratorium to avoid hefty payments in the future. This facility should only be explored in case there are an emergency or a complete loss of all income sources. One must always bear in mind that moratorium is not a zero-interest option and could lead to heavy financial complexity later on
2. Ignoring the Bill: Indeed, most of the cardholders are not using their credit card as much as they used to before lockdown. This is because of a variety of causes ranging from restrictions on going out to the shut down of factories thus limiting supplies of non-essential items. In such a scenario, many individuals might put the bills aside thinking of taking this chore later on. Generally, individuals feel that these bills are meagre and can be accrued and be paid in whole later on. This temptation of ignoring the credit card bills may act as a blunder. This will accrue into a heap of liabilities as it will accumulate 3% to 4% interest every month on the outstanding dues and fresh purchases. The interest accrued can be quite burdening on the pockets even if it is ignored for just a couple of months. Thus, it is suggested to keep a check on the credit card bill payments and ensure prompt pay off of the outstanding dues
3. Unnecessary Purchases: Government is gradually easing the restrictions on the movement of non-essential goods. This might result in an urge to buy a lot of appliances, and luxury items which were not available during the lockdown. Credit cards are the most adopted means of transactions for online shopping, thus making the credit cardholders the most susceptible victims of unnecessary shopping. As people are staying indoors, all their shopping is being done online. In addition to this, if they end of buying unplanned things, they might end up overusing their credit card. Thus, individuals must control this urge for shopping and save themselves from the hefty credit amount
4. Card Misplacement: Another mistake to avoid during COVID-19 is to be careful of your credit card and the transactions that take place using it. Since we are not allowed to move out of our homes during the lockdown, the chances of card misplacement are less. However, in case you do go out for some urgency, make sure you keep your card safe as it would be more complicated than usual to track your card. Though the banks are operational as they come under essential services, they are working on a roster system and might not be able to serve you right away. Apart from losing your card, fraudsters have become more active than ever during this pandemic. It has been reported that fraudsters are coming up with several malware and phishing apps to trap cardholders. Thus it is crucial to be vigilant of all the transactions being done with your card
5. Unused Reward Points: Credit cards mostly provide reward points to the cardholders on various transactions. These reward points vary with the amount of transaction made with the credit card. Though the cardholders might not make big payments during the lockdown, the reward points from small payments might accrue. Cardholders might forget about these reward points and they would expire. Thus, cardholders should be cognizant of their expiration date and use them to save money