Credit cards are tools. In skilled hands, they pay for flights, groceries, and cashback. In unskilled hands, they compound into high-interest debt that takes years to unwind. Here are the seven mistakes we see most often.
1. Paying only the minimum due
The "minimum due" is usually 5% of your outstanding. The rest rolls over at 3–4% per month (36–48% annualized). Paying ₹2,500 on a ₹50,000 bill keeps you in debt for years and costs more in interest than the original purchase. Pay in full, every month, without exception.
2. Using cash advance
Covered in detail elsewhere — never do this unless you genuinely have no other option. Even then, exhaust every alternative first.
3. Ignoring the statement
Fraudulent transactions, billing errors, and forgotten auto-debits show up on your statement first. Review every statement within 48 hours of receiving it. You have a window (usually 30 days) to dispute unauthorized charges and it's your responsibility to flag them.
4. Applying for too many cards at once
Each application triggers a hard inquiry that dings your CIBIL score by 5–10 points. Applying for three cards in a month can cost you 30 points. Space out applications by at least 3 months.
5. Closing your oldest card
Credit age is 15% of your score. Closing your oldest card shortens your average account age and can drop your score 20–40 points overnight. If an old card has a fee, downgrade to a free variant instead of closing.
6. Treating credit limit as spending money
Your credit limit is not your budget. A ₹5 lakh limit doesn't mean you can afford ₹5 lakh of monthly spend. Budget based on income and savings goals, not on what the bank allows.
7. Carrying balances on multiple cards
Revolving debt across 3 cards at 36% interest each is the fastest path to a debt spiral. If you're in that situation already, stop using the cards, list the balances smallest to largest, and aggressively pay them down (snowball method) or consolidate into a single personal loan at 11–14%.