Credit card debt is slowly taking a hold in our society with more and more cardholders gaining access to this form of money. With increasing number of cardholders, the amount of credit-card related issues and the defaulters tally is also increasing. Many cardholders forget that while a credit card buys time, you have to eventually pay for your expenses. They start spending more than they can really pay for in the stipulated time. Here are some tips that can save you from the shackles of bad credit:

Credit Card Do's

Make your payments on time

This is a golden rule for credit-card payments. Always pay your credit-card dues before the due date. Timely payments can not only save you from debt piling up, but also bolster your credit score and protect you from penal charges.

Use your card wisely

Only use your credit card to spend on commodities and services that you can really pay for within the prescribed time. The market is full of flashy products that often lure you towards extravagant purchases. And with a credit-card facility at your disposal, it is often too hard to resist. Still if you have any doubts about how you will pay for expenses, it is wise to push away the temptation of buying a commodity that is beyond your means.

Pay your credit card dues in full

Leaving a significant outstanding amount every now and then or regularly can affect your credit score badly. Also, there is a higher rate of interest on overdue amounts, which brings with it the risk of accumulating debt. It also lowers your credit score. Thus, timely and full payment of credit-card dues is a must.

Check your monthly credit-card bills thoroughly

Make it a habit to go through your credit card bills in detail to figure out any error or unauthorized charges. In case of an error, report it immediately to the card provider. Most credit-card companies have a robust customer-care support system to handle these issues.

Credit Card Don'ts

Don't reach your maximum limit

In general, don't reach your maximum borrowing limit. It's ideal to keep your credit-card expenses in the 50% range of your borrowing limit. It can help you to raise your credit score by as much as 10%. It also creates a good impression on loan providers, employers, and insurance companies. Don't carry all your credit cards with you, especially when you are on outdoor locations – as this may tempt you to make lavish purchases that you could repent later. Also, there is always a risk of losing a hefty amount in case your wallet gets stolen or misplaced.

There are many other don'ts that if not followed could adversely affect your credit  score. For example, you should not transfer huge balances in one card just to use the zero-interest-balance transfer. It is wise to use your credit card as a payment facility only, rather than viewing it as a source to get some easy debt. Following healthy practices will not only save you from getting into recurring debt cycles but also strengthen your credit score.

Disclaimer: Copyright Kotak Mahindra Bank Ltd.

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