7 Dangerous Credit Card: In today’s world, credit cards have become a common part of our lives. Whether it’s for shopping, ordering food online, booking tickets, or needing money in a sudden emergency, a credit card comes in handy.
This is why people have started using them everywhere, considering them a convenience. However, we often forget that credit cards, as easy as they seem, can be equally dangerous if misused. There are certain habits that can not only damage your CIBIL score but also attract the attention of the Income Tax Department.
How Misusing Credit Cards Can Lead to Trouble
People often think they can pay back the money spent on their credit cards later, but this mindset gradually leads to big problems. Overspending, repeatedly exceeding your credit limit, and not paying bills on time can ruin your financial health.
Sometimes people make large purchases without thinking, which makes the bank suspect that there’s a mismatch between your income and expenses.
Overspending Can Be a Warning Sign
When someone spends significantly more than their income using a credit card, it can directly put them on the Income Tax Department’s radar.
If there’s a large discrepancy between your bank statements and your Income Tax Return (ITR), the department may question you. Many people think that expenses made with a credit card are not tracked, but the reality is quite the opposite.
Frequent Cash Withdrawals Can Be Costly
Some people withdraw cash from their credit cards and use it for everyday expenses. This habit is considered the most harmful. Cash advances not only incur high interest rates, but banks also consider them risky transactions. Doing this frequently can put your account under suspicion.
The Burden of Unnecessary Online Shopping and Subscriptions
Nowadays, small payments on OTT platforms, gaming apps, and online shopping sites seem easy. But when these expenses add up every month, they become a large sum. Often, people forget which subscriptions they have, and money keeps getting deducted unnecessarily. This habit can ruin your financial planning.
Frequently exceeding your credit limit can be risky
Your credit card limit is determined based on your financial situation. If you repeatedly reach or exceed this limit, the bank considers it a negative signal. This not only lowers your CIBIL score but can also make it difficult to get a loan or a new card in the future.
Not paying bills on time can be costly
Many people think that paying a day or two late won’t matter, but this habit gradually becomes a burden. Late fees, high interest charges, and a poor credit score can all weaken your financial position. If this continues for a long time, the bank will report your information to credit bureaus.
Spending more than your income can lead to an IT notice
If your expenses consistently appear to be higher than your declared income, the Income Tax Department may raise questions. Expensive shopping, travel, or luxury expenses, especially if paid for with a credit card, are easily tracked. In such cases, you may have to explain the source of your spending.
Use it wisely to reap the benefits
A credit card is a convenient tool, but only if used judiciously. Paying bills on time, spending according to your needs, and staying within your limit are key to making it beneficial. Otherwise, this convenience can gradually become a source of financial stress and trouble.
Disclaimer: This article is for general informational purposes only. The information provided herein does not constitute financial advice of any kind. Credit card rules, charges, and tax laws are subject to change from time to time. Please consult your bank or financial advisor before making any financial decisions.
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