Common credit card mistakes to avoid
If you regularly use your credit card, you’ll know how easy it is to plonk down the plastic for your shopping and other purchases. It’s also easy to forget those pesky card payments that follow.
Along with the convenience of credit cards comes the danger that your bills can quickly snowball into a major debt that can linger for years if not managed properly.
It pays to be aware of the pitfalls of credit cards and ensure you’ve got good habits in place to avoid them as much as possible. The following are a few suggestions:
Shop around for the best card deals
Don't make the mistake of signing up for the first credit card offer that arrives in your mailbox. Go online and look for the best possible card terms and features to suit you. Credit card rates can vary significantly, depending on the card and type of promotion offered.
Rewards programs
Following on from the point above, make sure the card you choose provides features you genuinely need and will actively use. Credit card rewards are promoted to make consumers think they’re getting something for free. But when you add up what it costs to earn rewards, a rewards program may not be much of a perk. For instance, credit cards that offer rewards often have much higher interest rates than cards with no rewards.
Keep track of your spending
While using a credit card sometimes feels like you’re not really spending money, not keeping track of your spending can wreak havoc on your finances. Carry a small notebook or if you’re more tech savvy, use one of the many apps available on your phone to record your purchases so you won't get a nasty shock when you receive your monthly statement. Make sure you check your statements regularly too.
Late and minimum payments
Credit card payments that aren’t paid on time result in late fees and higher interest rates. Read through your credit card statement carefully so you know when the payment is due. Consider auto-payment facilities or put a recurring note in your calendar each month a few days in advance of your payment due date to ensure you don’t miss it. Most card statements list the date that payments must be received by to avoid penalty interest fees. Ideally, it’s best to pay the full amount every month. Only paying the minimum amount will make the situation worse over time by attracting cumulative interest payment penalties.
Using cash advances
While they’re a tempting option, cash advances attract higher interest rates and should be used with care.
Handle with care!
Credit cards can be useful financial tools when used responsibly. Getting into good habits can ensure you take full advantage of the benefits while avoiding the traps.
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