Credit cards are considered to be one of the best ways to build a credit history and a good credit score. But do you know if you are not careful, the small metal card can do more harm to you than good? While going for any loan, be it a personal loan from Anytimeloan or other financial institutions, you may need a review of your credit score. Hence, for better credit history and credit score, make sure you avoid the following mistakes people often make while using credit cards.
- Making late payments: Your credit score gets seriously affected if you are late or missed payments by more than 30 days. Hence, you must stick to the schedule each month and make timely card payments.
- Get lulled by offers: Many e-commerce websites come with loads of offers on credit cards, and one of the most valued benefits or advantages of having a credit card is the ease of buying stuff by simply swiping a card which also happens to be its biggest disadvantage. Though it is very easy to get lulled by these offers, remind yourself of how it is one of the ways of falling into a debt trap.
- Maxing out your credit card: A maxed-out credit card increases your credit utilization ratio and affects your credit score to get low. It indicates your income is not enough to take care of your bills.
- Allowing your credit card to be charged off: When your credit card is charged off, it means your account has become delinquent, and if it has been in this status for more than 6 months, the lender may share your details with the collection agency to recover the outstanding balance. Thus, if your account is showing delinquency, make it active before it affects your credit score to go down. Remember the charge-off remains on the credit report for seven years and further affects your future financial life.
- Only paying the minimum payment each & every month: It is one of the biggest mistakes you could make with your credit card by just paying the interest accrued and not the whole amount but in the long run, this habit of yours may make you end up paying more money. The higher the balance you carry forward, the more interest it accrues over time which you need to pay. Paying only the minimum amount mentioned on your credit card bill will hardly make any difference in the principal sum. Hence, it is best to pay the balance in full each month.
These mistakes can easily be avoided by availing of a personal loan either from a bank or online personal loan apps such as Moneyview, Anytimeloan, or any other app. Personal loans, as we all are aware, are collateral-free loans that people usually avail themselves of to fund either urgent or planned expenses. However, if you are someone who doesn’t have control over their spending limit, a personal loan can help you stay put with your savings and ensure you don’t fall into a debt trap. Here is how a personal loan can help you avoid the aforementioned mistakes:
- The biggest advantage of personal loans from Moneyview or any other online portal or bank is they offer a low-interest rate and come with a fixed tenure and EMI. This predictability makes it easier to build your budget as you would know your monthly outgo in terms of EMI in advance and also know the exact date when you will be out of this debt.
- A personal loan is usually cheaper compared to spending via Credit card. For instance, Moneyview charges 1.33% per month Interest, Anytimeloan charges 0.05% interest per day, while most of the credit card lenders charges around 36% interest on a credit card bill. Paying via credit card is better if you pay the loan amount in the interest-free tenor, or else the liability of carrying an outstanding balance can lead you to pay charges up to 47% p.a.
- A personal loan, unlike credit cards, doesn’t allow you to continuously borrow more money, thus removing the dependence on a loan. With a credit card, it is very easy to go over the limit, which is not the case with a personal loan. A personal loan from the right lender, for example, Anytimeloan, can help you clear off the debt timely by making periodic payments at fixed intervals and doesn’t charge you foreclosure charges.
- You can easily apply for or avail of a personal loan in India to consolidate credit card debt as we all know that the interest rate on a personal loan is typically lower than credit cards. For example, Anytimeloan charges 0.05% interest per day. This option should be availed if you are struggling to make monthly outgo or your current expenses supersedes your income and savings. In this case, a personal loan from the right lender, such as from Moneyview offering a low-interest rate, maybe the best option to help you pay off the debt.
- With a personal loan, one cannot forget the fact they will be saving money which they would have spent on credit card bills. On top of the accruing debt with high-interest rates, the credit card comes with a lot of penalty charges for instance late fees, over-the-limit charges, etc. These charges keep adding to the existing debt and make it difficult for the borrower to ever get out of this vicious debt cycle. On the other hand, a personal loan comes with a small processing fee of its own, which, if you compare it with a credit card, may seem insignificant. This not only gives freedom to the borrower from the added charges but also helps them to start saving.
While there are numerous benefits of having a credit card, from helping you build a credit score, providing you instant funds in case of emergency, it gives you an added benefit, but amidst this, it is important to keep track of your spending. If not used properly, it may hurt your credit score and take you towards a debt trap. This is where availing personal loan from Moneyview or from any other bank can help you. From an overall perspective, both credit card and personal loans seem the same, but the difference is the low-interest rate charged on the personal loan in comparison to the credit cards. If you tend to splurge a lot and don’t have sound saving habits, availing personal loan for your needs can help you stay on track.