Credit Card Mistakes
If you already have a credit card, you want to be sure you are using it to your advantage and avoid costly mistakes. To help you avoid these mistakes, here is a list of the ten biggest credit card mistakes you can avoid.
1. Paying the minimum every month
Making the minimum payment on your credit card not only increases the amount of interest you pay on your credit card, it will eventually affect your credit score in the long term. The rate of interest varies at 24 to 26 % per annum so it is the most expensive debt to have. If you find that you can’t service the full payment for more than three month, it will be wise to use cash instead.
2. Paying late
It happens to many of us – being prompt for our credit card bill payment until the day we are out of town. You can try to give the issuing bank a call to explain the late payment and try to get them to waive your late payment charges (usually $50). It may work, especially if you have a regular record of prompt payments. To avoid it happening again, you can set up a Giro Payment to pay off your credit card bills automatically every month.
3. Cash Withdrawals With Your Credit Card
When you withdraw cash from the ATM machine using your credit card, interest is charged from the moment the cash is withdrawn. The cash is treated as credit card debt. Some people make this mistake, especially when they are overseas. If you need emergency funds overseas, withdrawing with your bank card is always a better idea.
4. Loaning your credit card to someone else
This is a definite no-no, and much worse than passing someone your bank account card! When you loan your credit card to someone else, you have no control over the purchases they make and you will ultimately by the one responsible for paying the bill. Never loan your credit card unless you’re prepared to pay for all the purchases they make.
5. Waiting to report your lost credit card
The longer you take to report a lost or stolen credit card, the more time you are giving the thief to charge up your account. By reporting your missing credit card as soon as you can, you are limiting your liability for fraudulent charges.
6. Applying for too many credit cards simultaneously
If you apply for several credit cards within a short span of time, you might deal with more rejected applications as lenders may start to get suspicious about the sudden onslaught of credit card applications.
Even if you did not apply for them all at once, having too many cards may make tracking your payments difficult, making you more prone to late payments.
7. Spending Just to Earn Rewards
While we know earning rebates and rewards is one of the greatest draws of using a credit card these days, it shouldn’t be a motivating factor for you to spend. Think of these rewards as bonuses you earn by spending what you already need to spend on so that they do not influence your spending patterns.