7 Warning Signs of Wrong Credit Card Usage


It’s smart to pay with a credit card when you buy something. With error-free credit card usage, you can get points for every rupee you spend. You can also get offers for cash back or free trips. But it only makes sense to use a credit card if you know how to do it responsibly.

On the one hand, if you know how to use credit cards well, they can help you save money. But you must also pay your dues on time to get the most out of the benefits. On the other hand, if you don’t pay them back on time, they can become your worst enemy. It can hurt your credit and put you in debt.

A credit card can be hard to handle for a lot of people. It happens when the urge to spend too much is too strong. How do you know if you’re one of them? Keep an eye out for these four warning signs that your credit card usage may be out of control.

7 Warning Signs of Wrong Credit Card Usage

Careless credit card usage may have a long-lasting negative effect on your financial health. Seven warning signs that suggest improper credit usage are listed below:

Paying Only The Minimum Due Amount Each Time

Many people who use credit cards think that if they pay the minimum payment due, they won’t have to pay the high finance charges. Only if you paid the minimum amount due could you avoid late fees and a drop in your credit score. High finance charges of up to 23%–52% per year will still apply to the unpaid portion of a credit card bill. The interest-free period for new card purchases lasts until the amount is paid off.

If you can’t pay off your whole credit card balance at once, split it up into EMIs. The interest rate on converting an EMI is much lower than on late payments. With this option, people with overdue credit card bills can pay them off at much lower interest rates. Depending on their ability to pay back the debt, it can happen in smaller chunks. The terms for paying back the loan range from three months to five years. Choosing this path also brings back the benefit of the interest-free period for credit cards.

Exceeding The Credit Utilisation Ratio (CUR) by Over 30%

CUR is how much of your total credit limit you’ve used. If your CUR exceeds 30%, your credit score could go down. Most lenders think that people with a CUR of over 30% are looking for credit. So, ensure you don’t use more than 30% of your credit card usage limit.

If you often exceed this limit, ask the credit card company to raise it or move it to another card. If you don’t do either of these things after getting a higher credit limit, you may be able to lower your CUR. For better financial health in the future, it’s best to stick to this reasonable CUR limit.

Disregarding the Expiration of Reward Points

Card issuers get more people to sign up for their cards by giving them reward points. Some credit cards let you use the reward points you’ve earned to pay the balance. Others give access to services and goods that have already been chosen. These can be things like gift cards, coupons for travel, or merchandise.

You shouldn’t lose the benefits of the reward points you’ve earned for better credit card usage. Most of the time, these reward points are good for two to three years. Take advantage of the chances to use them!

ATM Cash Withdrawals Made With Credit Cards

A cash withdrawal fee of up to 3.5% of the withdrawal amount may be assessed for credit card usage. Also, card issuers charge finance fees of about 52% p.a. from the day of the withdrawal until the day of the payment. Try to limit the number of times you use your credit card to get cash. If you have to, pay back the amount you withdrew as soon as possible. It would cut down on the fees used to pay for extra interest costs. So, you have to be careful when using ATMs to get cash out.

Unplanned Spending As Per The Interest-Free Period

The time between when you buy something with your credit card and when you have to pay for it is called the “interest-free period.” The average length of this time is between 18 and 55 days. As long as the debt is paid on time, you won’t have to pay interest on credit card purchases made during this time. This is called a finance charge.

Ignoring a Credit Limit Increase Offer

Many credit card users frequently refrain from raising their credit card usage limits. This is because they are worried about spending too much and getting into too much debt. But keep in mind that if you use money wisely, it can help your finances. So, if the company that gave you the card offers to raise your credit limit, you should consider it. You’ll be better able to handle money problems and spend more when you need to.

Remember that if your credit limit goes up, your CUR will go down. It makes your credit score better. And because of that, your chances of getting loans and credit cards in the future increase.

Utilising Several Credit Cards At Once

People often try to carry more than one credit card. They want to take advantage of the deals that different stores offer for credit cards. But it can be hard to keep track of more than one card. When people have a lot of credit cards, they have to pay more attention to the different due dates. These deadlines could cause unintentionally missed payments and make credit card usage inconvenient.


It is imperative to avoid these typical credit card mistakes. You shouldn’t open a new credit line if you want to keep your finances stable. Remember to check for these mistakes. This is especially true if you have a big debt or a high-interest rate that you need to pay off. It’s also important to keep your credit score in good shape.

To know more about credit card usage and other financial tips, visit the Piramal Finance website. You can also look at the various products and services they offer.