Many people get credit cards without thinking but they do not know that credit cards have benefits but at the same time you may have to face huge losses. About the 10 biggest disadvantages of credit cards. If you are applying for a credit card then you should know this information well.
Apply for a credit card online or offline only after knowing all the important information and instructions about the credit card thoroughly, otherwise you may have to face huge losses.
10 biggest disadvantages of credit cards
1. You may develop the habit of wasteful spending
If you have a credit card in your pocket, you can spend freely. If you have a debit card, you will spend only as much as your salary. But with credit card you can spend more than your salary, in fact, you can spend much more.
Generally, the credit card spending limit is 2-3 times your monthly income. And if the credit score is good then this limit goes up to ten times.
2. Excessive interest and fees on late payment
The cost of credit card shopping ultimately falls on you. The bill will have to be paid only next month. The sword of due date will start hanging next month itself. Even the slightest mistake will result in punishment.
The shopping freedom you got will now have to be compensated for. If you make payment after the due date, you will have to pay interest. And this is not a small interest. This is the highest interest in the banking system. If there is delay in credit card payment, interest up to 42% per annum is charged. And it will be calculated from the day you made the purchase.
3. Surcharge along with payment on use of some services
You may not know that when we shop with credit cards, credit card companies take commission from the shopkeepers. This is called merchant discount rate and it is 2-3% of our shopping. But there are some service providers who do not pay this commission. Like petrol pump, railway etc. In such a situation, a surcharge is imposed to compensate for this commission. Credit card companies add fuel surcharge separately to your bill.
How to avoid surcharge
Do not pay for services on which surcharge is levied by credit card. For that you can use debit card or UPI payment.
If you want to make payment through credit card at the petrol pump, then use such credit cards which give exemption in fuel surcharge. Many credit card companies offer fuel surcharge waiver on card payments, especially fuel credit card payments.
4. Cash withdrawal limit is quite low
You are allowed to withdraw only 20 to 40% of your total credit limit as cash. For example, if your credit card limit is Rs 1 lakh, then the limit for withdrawing cash can be only Rs 20 to 40 thousand. The remaining amount can be used for card payment only. Due to this, you cannot use your money in the best way.
5. Transaction fee is deducted on withdrawing cash from credit card.
You are also allowed to withdraw cash up to a certain percentage (20 to 40%) of the credit card’s total spending limit. You can also withdraw this cash amount from ATM and transfer it to your savings account online. But, for this you have to pay a certain amount of fee.
For example, on withdrawing cash from SBI Credit Card, you have to pay 2.5% of that amount or Rs 500 as transaction fee. Transaction fee will be deducted at 2.5% or Rs.500, whichever is higher.
6. Interest is also charged on the money taken in cash till it is returned.
The cash you withdraw from a credit card is like a loan. You also have to pay interest on it at a higher rate. For example, interest on cash withdrawn from SBI credit card is 3.5% per month or 42% per annum. This interest is calculated from the date of withdrawal, till the date of repayment or date of settlement.
8. Credit card processing fees and renewal fees
With many credit cards, there are a variety of additional fees. Such as annual credit card fee, charges on foreign transactions, charges on cash withdrawals, etc. Many cards also charge a joining fee.
9. Under the pretext of minimum payment, recovery of more than actual payment
While paying the credit card bill, you also get an option of minimum due amount. That is, if you do not want to pay the full amount of the bill, you can manage by paying at least the fixed amount. By doing this your payment is not considered in the category of late payment. And there is no late payment fee.
10. The risk of becoming a victim of fraud increases
Although payment by credit card is quite safe. But, people with credit cards carrying large amounts of money remain the target of fraudsters. They try to get PIN or OTP information from you by pretending to increase credit card limit or update KYC.
Attempts are also made to obtain your PIN by giving offers for online shopping at very cheap rates or luring you with the promise of receiving some prize money or cashback. You can also make card transactions in many other ways, such as by downloading one of your apps and accessing data from your mobile or computer.
How to avoid credit card fraud
Do not open any such link sent on your mobile or through email, in which you are getting any kind of reward, cashback or offer to earn a lot of money easily sitting at home.
Disable the option of foreign transactions from your card.
If someone pretending to be a bank employee or credit card employee asks you for PIN or OTP number to connect any facility, then do not tell it at all. You should do any such work only by visiting the bank branch or the official website or app of that credit card company.
| JOIN TELEGRAM | Click Here |
