Don’t Make These Transactions To Avoid Falling Into Credit Card’s Debt Trap

How To Use Credit Card: In today's time, the use of credit cards has increased a lot. People want to do every kind of transaction from small to big with credit cards. This is because the more transactions you do, the more reward points you will get and later you will get gifts, shopping or cashback from those reward points. However, while using a credit card, people often forget that they are shopping by taking a loan because a credit card is a type of loan. Everyone has to repay it later and even a small mistake can lead to huge losses. Let us know about 3 such transactions, which should never be done with a credit card or should be done only under compulsion, otherwise, you may get into trouble.

1- Do not make the mistake of withdrawing cash from an ATM

While selling all the credit cards, from banks to agents, they tell you about its special feature that with its help you can withdraw cash. However, they do not tell you that heavy interest will be charged on the cash you withdraw from the very first day. This interest can be charged at the rate of 2.5 to 3.5 per cent per month. At the same time, you also have to pay a flat transaction tax. On one hand, you get a month to pay the bill for shopping done through a credit card, and if you do not pay the bill by the due date, you are charged interest. At the same time, there is no time to repay the cash withdrawn from the ATM and interest starts accruing.

2- International transactions can be costly

One of the features of every credit card is that it can be used abroad. This feature of credit cards also attracts many people, but many people do not understand the story behind it. When you use credit cards abroad, you have to pay transaction fees, which keep increasing and decreasing. By the way, if you want to use a card instead of cash abroad, then you can use a prepaid card instead of a credit card.

3- More use in balance transfer

Balance transfer is a feature available on many credit cards. Using this, you can pay the bill of one credit card with another credit card. It may sound amazing that first, you get 30-45 days to pay the shopping bill on one credit card and then you make the first payment on the other credit card. In this way, you get 30-45 days to pay the shopping bill. You will get time of 2-3 months.

However, let us tell you here that a balance transfer is not free, for that you have to pay a charge to the credit card company or bank. It has an even bigger disadvantage. A credit card is a type of loan. In such a situation, if you pay the bill of one credit card with another, it means that you are taking another loan to settle one debt. In case of an emergency, when you are very short of money, there is no problem in transferring the balance, but do not make it a habit. Doing this too much will have a negative impact on your CIBIL score.