Credit Card Tips: Have a credit card but do not use it, doing so can also create problems...
Nowadays, having a credit card has become a very common thing. Due to cashback and discounts, people are now making payments through credit cards only. Using credit cards also has its own benefits. Here you get credit for one month without any interest. How much credit you will get depends on your salary. Usually, it is 3-4 times more than your in-hand salary. If a credit card is used excessively, it can cause problems. You may get trapped in the trap of debt. Because after the due date, a lot of interest has to be paid on it.
But it is not just its haphazard use that gets you into trouble, sometimes not using it at all can also create problems. We know that people also use credit to improve their credit scores. Not using it at all can also become a cause of trouble for you.
What can happen; what can be done?
If you do not pay any credit bill, you will not be charged any penalty but if the card remains inactive for a long time, the company will close it. After how much time of inactivity your card will be closed will depend on the card issuing institution. Whether any information is given to you before closing the card or not will also depend on the card issuer. He is not obliged to do so. In a normal situation, this will not affect the customer, but it may cause problems for those whose credit limit is less. Their credit score will be affected by this.
Decline in credit score
The second disadvantage will be the decline in credit scores. Even if you use the card too much, your credit score falls and if you do not use it at all, it also falls. When a credit card account is closed, the credit limit of the cardholder falls by 30 percent. This affects the loans you take in the future.
When should one close the account automatically?
If even one of these 3 circumstances matches you then you may consider closing your credit card. First, this should be your oldest account and you now have other credit cards. The second condition is that your credit utilization ratio should not be more than 30 percent. Third, there is no clear incentive for keeping your card.
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