14 Worst Credit Card Mistakes

Top Credit Card Mistakes

Top Credit Card Mistakes

The road to a mountain of debt is usually littered with a trail of maxed out credit cards. Credit cards are very easy to use incorrectly and can quickly become a major financial problem. Unfortunately many people use their credit cards in ways which lead them towards financial disaster. They can often look like the solution to a financial problem, when the reality is they are the start of a financial problem.

Let’s take a look at the 14 worst credit card mistakes!

1. Getting a Card When You Don’t Need it or For The Wrong Reasons
If you don’t actually need a credit card, why get one? Another mistake is getting a credit card for the wrong reasons. If you decide to get a credit card so you can afford a holiday or so you can afford an impulse purchasing decision — it could be a mistake.

2. Choosing the Wrong Credit Card For Your Circumstances
When you select a credit card, attempt to obtain one that matches the way you buy items and how often you can make repayments. Get a credit card with a credit limit that matches your income so it’s impossible to over extend yourself.

If you intend on paying off your credit card quickly, you only need a small interest free period. By getting a card with a smaller interest-free period you might be able to access other benefits. If you will be slower paying off the card, look for one with the lowest interest rate, even if it has a higher annual fee.

3. Not Getting The Benefits From Your Card
Many credit cards have certain deals attached to them. Some cards can give you discounts if you shop at certain stores, or have high interest free periods from certain stores. Other credit cards cards offer free travel insurance if you buy the holiday on the credit card, a substantial saving.  If you are more aware of these benefits you can maximise the returns from having that particular credit card!

4. Not Reading The Fine Print to Understand Fees and Charges
You should spend some time reading about the fees and charges attached to your credit card. The most important attributes on the credit card you should understand are – interest free period, interest rates charged, annual fees, late payment penalties, honeymoon period duration and balance transfer rules.

5. Only Making Minimum Payments
If you only make minimum payments you dramatically increase the amount of time it takes to pay down the card.  Additionally, the balance will be attracting the maximum interest rate before long.  If you can increase the minimum monthly payment by even a small amount, you can shave years off of the repayment time.

6. Making Late Payments
If you make a late payment on a credit card you can receive a late payment fee that is often higher than the minimum repayment! Additionally late payments can affect your credit score. Enough late payments on credit card can start to affect what kinds of credit lines are available to you, and the interest rates you can obtain.

7. Not Comparing Credit Cards For Value
Don’t rush in and accept the first credit card offer you receive.  It’s important to look at the value that is provided by a number of credit cards and select the one that offers the best value for your spending patterns and income.  There are many credit card comparison web sites so make sure you spend some time comparison shopping.

8. Loaning Your Credit Card to Someone Else
It’s never a good idea to loan your credit card to someone else, including family members.  If you loan the card to a relative or friend who claims to only need it for one or two purchases, you could get a rude shock when the next credit card bill arrives.

9. Not Checking Your Credit Card Bill
You must always check your credit card bill to ensure there are no incorrect charges listed.  Credit card fraud is rife within the United States and stores often simply make mistakes.  It’s crucial that you find the error early and contact your bank with any discrepancies.

10. Letting Your Credit Card Get Stolen!
Credit cards should be safeguarded as much as you would a massive wad of cash within your wallet.  If you are unsure about the honesty of a particular establishment, use cash to avoid fraudulent behavior.  If your card is stolen, report the theft immediately to limit your liability on the fraudulent charges.  A criminal can wrack up vast amounts of debt on the stolen card very quickly.  There can be negative effects on your credit rating and your financial health if the card makes it into the wrong hands.

11. Applying For Too Many Credit Cards
It is possible to lose points from your credit score if you apply for a large number of credit cards within a short period.  The companies that calculate credit scores use the number of credit card applications as an indicator for your financial stability.

12. Not Understanding Introductory Rates
If you see a credit card deal that is too good to be true, it probably is.  Many cards have generous introductory interest rates and conditions.  You need to read the fine print and understand what happens when the introductory period is over.

13. Go Over Your Credit Card Limit or Maxing It Out
If you lose control of your credit card, the problems really begin.  Firstly you will receive one or more fees from the financial institution, then your credit rating will be seriously impacted.   Some cards have penalty interest rates for cards that are maxed out.  So if you thought the standard 22% rate on the card was bad, when the card is maxed out and starts accumulating debt at 30% you will be extremely worried!

14. Buying Items You Simply Don’t Need
A huge mistake amongst credit card users is that they buy things they don’t need more often. This is because credit cards make the purchasing process incredibly fast. With Internet shopping, people also have thousands of ways to waste their money! Be careful with what you are willing to spend money on.  Don’t buy crap you don’t need!


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