Due to these 5 misconceptions, people do not use credit cards, know whether it is a debt trap or a treasure of benefits.

'Credit card' - On hearing this word, many people get scared of debt, wasteful expenditure, and huge bills. Often it is seen as a 'debt trap' from which it is difficult to get out. But is this true? The truth is that credit card is a very powerful financial tool if it is used with the right information and discipline. The problem is not in the card, but in the misconceptions associated with it. Many people do not use credit cards due to these misconceptions. Know its truth here.

Truth: This is the biggest myth. Credit card puts you in debt when you do not repay the money spent on time. Every credit card comes with an 'interest-free period' (usually 45-50 days). If you pay your entire bill before the due date, you do not have to pay a single rupee of interest. The problem of credit card debt starts only when you postpone the bill or pay only the minimum amount.

Truth: This is a big mistake, which affects both your CIBIL score and pocket. 'Minimum due' is a small amount, by paying which you can avoid late payment fee, but the bank starts charging very heavy interest (35% to 48% per annum) on the entire remaining amount. Due to this, your outstanding amount increases very fast and you get trapped in the debt trap. Always try to pay the entire bill.

Truth: This sounds right, but it can be harmful for your credit score. Your CIBIL score also depends on how old your credit history is. Your oldest credit card shows your credit history. Closing it shortens your credit history, which can have a negative impact on the score. If there is no annual fee on that card, keep it running and keep making one or two small transactions in a year.

Truth: Credit card charges are not 'hidden' but 'unseen' because most people do not read the terms and conditions carefully. In particular, it includes annual fee, late payment fee and cash withdrawal charge. If you pay the bill on time and do not withdraw cash, then you have to pay only the annual fee (which is also waived on many cards).

Truth: If the bank is increasing your limit, do not refuse it. This shows that you are a reliable borrower. This increases your spending capacity and the borrowing seems less compared to the total credit, which improves the score.