6 Credit Card Mistakes to Avoid During Lockdown

Due to the COVID -19, the economy of every nation has been sabotaged. All the countries are focussing more on saving lives than a livelihood. Due to lockdown, very few sectors are working with a minimum workforce, and many organizations have either issued layoffs to their employees or done a cut off in their salaries. Due to this, it had become difficult for a large section of society to meet their daily expenses. A significant section of society that has been jeopardized by this pandemic is the middle class. People have started using all their savings so that they can meet their present needs. They have also begun spending beyond their credit limits, but they don’t know what to do next? When all their credit limit ends.

So here are 6 credit card mistakes to avoid during a lockdown:-

Putting a moratorium on credit card dues:-

In the ongoing lockdown period, which is now called unlock:2, people are not repaying their credit card dues, which has resulted in substantial amounts of debt. To create an obstacle for the debt, we try to put a moratorium on credit card dues. But as interest in debt starts increasing, it will soon be converted into hefty financial charges, which may range anywhere around 24-48%. To avoid paying this huge cap, you can choose an EMI option to pay by selecting the minimal interest rates. In March, the Reserve Bank Of India (RBI) announced a 3 months moratorium on the repayment of debt due between 1 march 2020 and 31 May 2020. Keep in mind that all the solutions are temporary, so stop spending and start repaying the dues as quickly as possible.

2. Unnecessary credit spending:-

As there has been a relaxation in the lockdown, due to which shops have been reopened, and e-commerce sites have also resumed their services of delivering non-essential items to all the places except the containment zones. People have to get their hands away from this kind of unnecessary spending because nobody knows how much time this pandemic will stay and will make us financially suffer. If you are one of those people who feel uncomfortable entering your card details on e-commerce sites because of privacy concerns, you can definitely use a visa credit card generator. Don’t use your credit card for luxury items. Try to use it for essential items like medicines, fruits, vegetables, etc. Think twice and spend as much precision as you can for sustainable growth.

These periods last between the date of the credit card transaction and the due date of payment. This is usually 20-52 days, and during this period, there are no finance charges unless one defaults on the last day. Therefore, this period is the best time to spend and maximize this benefit as it is free of any charge or interest and is useful when there are short-term liquidity mismatches. 

    3. Reward points expiry:- 

When you are purchasing your credit card, the respective bank offers you reward points. Different banks have different reward point policies, as some banks provide 20-40 paise for every 100 rupees, whereas other banks can offer up to 1 rupee. You have to keep yourself updated because these reward points expire after a limited amount of time and go to bane. You will get higher reward points if you spend more, while this can’t happen in this challenging time. So try to aggregate as many reward points as you can through your essential purchases.

    4. Exceeding credit utilization ratio:-

The credit utilization ratio is the proportion of total credit card limit utilized by you. Generally, the credit utilization ratio of over 30% is considered credit hungry, which tends to decrease your credit score. So to maintain a good credit score, try to keep your credit utilization ratio within 30%. You can ask the lender to increase your card’s credit limit, or you can ask for a new credit card. If you maintain a good credit score, then the lenders will also show some generosity with you. Always try to keep yourself within 30% of the credit utilization ratio.

This refers to the proportion of credit utilized. It is always good to maintain around 30% credit utilization ratio as if it is more, and banks doubt your creditworthiness. 

Therefore all of the above must be kept in mind during these trying times. Another critical point is that one should not misplace one’s credit card. Although the chances of this happening are low due to the lockdown, one must still be careful because banks cannot function normally, and replacing the same will take longer than usual. 

The chance of fraud has increased due to the pandemic with COVID-19 related malware and phishing applications, so it is better to use credit cards for transactions as banks can easily retrieve these losses instead of debit cards. 

    5. Withdrawing cash through credit card:-

Withdrawing cash through a credit card can charge you a high interest (approx. 3.5%). This high rate of interest varies from card to card. For solving this problem, we should take the help of the digital world by making e-commerce purchases. We should also ask for card payments in the retail stores. This will generate more reward points and help in maintaining a good credit score. You can use UPI transactions as a source of payment directly to your bank account. Sometimes cash withdrawal is indeed inevitable, so always put cash withdrawal through a credit card as your last possible option. 

    6. Not using a credit card for long:-

If you are not using your credit card for a long time, then there are chances that your credit score will go low as the issuing authority will understand that you don’t have any interest in using that card. Try to make some big purchases with your credit card. This will allow you to maintain credibility. There are many benefits of using a credit card as you don’t have to carry too much plastic money. Good e-commerce platforms always provide fascinating discounts to their customers on using credit cards.

So try to avoid these mistakes and have a secure lockdown, and pray for a prosperous future.Since one may not have used it much during the lockdown, it may be easy to ignore it and forget to pay it as it may be a negligible amount. However, this will only increase your liabilities, and your monthly interest will accumulate on the dues. 

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