Credit card users, beware! You could face a penalty even without spending, and your loan application could get rejected..

Do you also use your credit card for shopping, dining out, and hotel bookings? Do you own more than one credit card? If so, this information is for you. People are increasingly using credit cards for everything from online shopping and paying electricity bills to subscribing to OTT platforms like Netflix and Amazon.

However, did you know that even a moment of carelessness can damage your credit score? A minor oversight regarding your credit card can not only disrupt your payments but also lead to the rejection of loan applications. Many people get a second credit card to avoid such issues, unaware that doing so can actually be detrimental rather than beneficial. Let us explain a crucial rule regarding credit cards.

Which date should you keep in mind?
When a bank issues a credit card, it assigns a specific validity period. This date is printed on the card in an MM/YY (Month/Year) format. You can make uninterrupted payments using the card until this date, provided you haven't exceeded your credit limit. However, once the validity expires, the card becomes nothing more than a piece of plastic, and all transactions associated with it are immediately blocked.

What happens when a card expires?
If your card expires and you fail to renew it on time, you could face setbacks on several fronts:

Disruption of Auto-Pay: Many people set up auto-pay for utility bills (electricity, water, gas) and OTT subscriptions using their credit cards. Once the card expires, these payments will fail, potentially leading to service interruptions and the imposition of penalties. Impact on CIBIL Score: When your auto-pay payments repeatedly fail due to an expired card, it directly affects your credit score (CIBIL score). The longer the card remains unrenewed, the further your score will drop.

Risk of Loan Rejection: Even though money may not be directly deducted from your pocket, a damaged CIBIL score can lead to banks rejecting your applications for home, car, or personal loans when you need them for an emergency in the future.

What to do when the card expires?
If your credit card has expired, get it renewed immediately via your bank's app, customer care, or a branch. Banks usually deliver a new card before the expiry date, but if that hasn't happened, you need to take the initiative yourself. Conversely, if you do not wish to use the card anymore, do not simply leave it as is; contact the bank to have it completely cancelled so that your credit score remains protected in the future.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.