Credit Card: If you are a new credit card user, never make this mistake, otherwise, it will not take long for your credit score to deteriorate..

Nowadays most people have started using credit cards. The reason for this is that you can make purchases through credit cards even when there is no money in your account. You get a short-term loan through credit cards, which if you repay in the grace period, then you do not have to pay any kind of interest. At the same time, various types of offers, discounts, rewards, etc. are also available on credit cards. Due to all these features, the demand for credit cards is increasing rapidly. But if you are a new user of credit cards, then you should take special care of some things. Otherwise, you may have to regret your mistake later.

Do not use more than 30% of the limit.

You may have a good limit on the credit card but do not use more than 30% of the credit card limit. If you repeatedly spend a very large amount on a credit card, then the bank considers you financially weak. In such a situation, your CIBIL score can be affected. If your CIBIL score goes down, you may face a lot of problems in taking a loan in the future. If you feel that 30 percent of the credit card limit is less, then you can increase the limit of your card. This will also increase the share by 30 percent amount.

What is the credit card limit?

When a bank issues you a card, it has a limit, the credit card user cannot spend more than that limit. This limit is usually decided based on income. The higher your income, the higher will be your credit card limit. Apart from this, your credit score, which is the record of your loan repayment, also plays a big role in this matter.

Banks consider these things before increasing the limit.

If you feel that your credit card limit is low and you want to increase it, then you have to understand that whether your credit card limit will increase or not depends on whether you are fulfilling the criteria set for the credit card or not. Before increasing the credit card limit, banks consider your annual income, age, job stability, and how much debt you have. Apart from this, your credit history and credit score also play a big role in deciding the credit card limit.

How is the credit card limit increased?

If you want to increase the limit of your existing credit card, then you have to inform the bank about it. After this, the banks look at the ratio of your income and expenditure and consider all the other parameters. If you meet all the criteria, then the banks increase your credit card limit. Apart from this, you can also apply for a new, upgraded card.

Also, keep these things in mind.

Minimum and total due

There are two types of due amounts, one is total due and the other is minimum due. If you pay only the minimum due, then the only benefit you will get is that your card will not be blocked, but you will have to pay heavy interest on the outstanding amount and this interest will be charged on the total amount. Therefore, while paying the credit card, always pay the total due.

Do not close the card suddenly.

If you have been using a credit card before and you have more than one card, then do not close the credit card suddenly. Closing the credit card suddenly can increase the credit utilization ratio because your credit utilization ratio was earlier divided between two cards, but after closing one card, it will be in only one. High credit utilization ratio spoils your credit score. Therefore, even if you do not use the card, keep it active.

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