Discipline is what we are taught from day one when it comes to making good use of our credit cards. Credit cards are our financial friends, and we may use them as per our situations and circumstances. Here are some credit card disciplines you may ignore in an emergency.
- Paying More than the Minimum Amount Due
Credit card companies give you the option to pay the minimum amount due or an amount greater than that on or before the due date. However, paying just the minimum amount due during an emergency period can help you focus on such things which are much higher on your priority list.
- Not Exceeding 30% Credit Utilization Ratio Level
It is usually recommended that a credit card user should keep the credit utilization ratio (CUR) under 30% for a better credit score.
It may result in a negative credit score if the card user often exhausts the card limit resulting in a high CUR. It is important to note here that exceeding the credit utilization ratio once in a while doesn’t impact the credit score immediately.
- Not Withdrawing Cash from Your Credit Cards
Besides swiping a credit card at shopping malls or buying stuff online, you can also use your credit card to withdraw cash. This is like your contingency fund to meet a serious emergency like to pay for the hospital bill or to purchase medicines.
Ideally, it is advised to use this option only when you need the money but in emergencies, we can use this option and withdraw cash as per the credit card limit. After coming out of your emergency, you can plan ways to quickly repay the credit card debt to avoid hefty interest payments.
- Not Converting the Reward Points To Cash
Credit card companies offer lucrative options to redeem the reward points when you use them for options such as to book travel tickets, hotel rooms, etc.
However, if you redeem the reward points to convert them into cash, you may not get the best value. So, usually, it’s not a good idea to convert the reward points to cash. However, in financial stress, you can’t think of going on a vacation. So here, you may ignore the normal guidelines and convert points to cash if it helps you.
- Not Stressing Your Credit Score
Paying your credit card bill late, exhausting the credit limit, applying for too many credit cards, etc., can stress your credit score.
A credit score is very important, but it should not stop you from accessing credit when you need it the most. So, you must prioritize paying the medical bill, etc. over maintaining a high credit score when you are into a deep financial crisis. You can rebuild your credit score in the future when you regain your financial strength.
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