Avoid these 5 transactions using credit card – Credit Card has become an extremely important instrument for not only carrying our day to day transactions but also to build credit history. Credit cards help you to improve credit score, pay for unexpected expenses, get cash back on transactions, rewards etc.
Along with benefits, credit cards also carry financial risks with them. It can put you in financial shock if you use it for transactions at wrong place. However, you can overcome those risks if you maintain a strict financial discipline in using credit card. Here in this article, we will update you with 5 transactions you should avoid using credit card.
5 Transactions to avoid using credit card
Cash withdrawal using credit card is a very costly deal. With my experience, I will suggest a strict no to cash withdrawal using credit card. I made this mistake as I was unaware about the charges. I withdrawn 2500/- from ATM using credit card. But soon after seeing my credit card bill, I got shock. My credit card bill was charged with too many fees – cash advance fees (2.5% to 3%), finance charges, interest.
So, never use credit card for cash withdrawal unless it is an emergency. Cash transactions on credit card attract high interest rate along with other charges. Unlike regular transactions, there is no grace period – interest is charged from the day of transaction till it is paid in full. Debit card is the best option for cash withdrawal from ATMs.
Using Credit Card overseas
When you are travelling overseas, never use your domestic usage credit card there. As you carry an Indian credit card and the balance on credit card is also in Indian currency. When you carry out the transaction overseas, various charges like currency conversion fees, foreign transaction charges become applicable.
So avoid using credit card overseas to save from financial shock. One thing you can do is apply international usage credit card.
Never do transaction on unsecured e-commerce websites. If you carry out the transaction on such sites, a hacker will easily access your credit card information and misuse it.
So always check for genuineness and security of transaction before proceeding for transaction.
Over limit use
Every credit card comes with a limit for spending which is set on the card when it is issued. The limit is decided by your credit card company depending on your credit worthiness, income and other liabilities.
An over limit fee is charged by credit card issuer when credit card usage exceeds your credit card limit. If you want to know about the applicable over limit fee then go through the terms and conditions booklet that comes with credit card. Along with over limit fee, it also gives boost to your credit utilization ratio thereby lowering your credit score.
So to avoid unnecessary charges, never use credit card once you exhaust your credit limit until you pay off the current bill.
Paytm Wallet Recharge
Never recharge your Paytm wallet or any other wallets using credit card. All transactions of loading money into wallet through credit card attract charges up to 2.5% to 5 %.