A coin has two sides. And same goes with things and situations in life. Likewise, your credit card can be good for you, or it can turn out to be the worst thing in your life. It is up to you, how you use your credit card. It is the only criteria which determine if a credit card will bring happiness, or it will cost you money.
It has been seen that credit card mistakes are becoming common occurrences these days.
Thousands of people are using credit card, and several of them are making credit card mistakes. Having a credit card does not mean that you have gotten free-money. On the contrary, it is a borrowed sum of money which you have to pay back.
Although getting a credit card can give you a happy feeling but it also brings responsibility with it. Responsibility of right usage and also payment of the money that you have used.
Wrong or irresponsible usage of credit card can lead you to fall in a debt trap.
And I hope that you definitely would not like to fall in a credit card debt trap.
At the same time, you can learn from the credit card mistakes made by others and make sure that you do not commit them yourself.
Here under we have compiled a list of ten Credit Card Mistakes so that you can know them and avoid them at any cost. Knowing can be a learning experience for you and in the context of credit card it becomes indispensable. These are the most important “Don’ts” for a Credit Card.
So let’s know them and become a responsible user of Credit Card so that you can enjoy its usage and avoid the Credit Card Debt.
10 Common Credit Card Mistakes
1. Having Too Many Credit Cards
This is one of the biggest mistakes you can commit as a credit card holder. Do not fall to the lure of having another credit card. You first need to analyze your requirements for having a new credit card. Although Credit Cards may offer low interest rates and charges, even allow zero balances, still you have to make the payments on their usage. Moreover, an extra credit card means more financial burden on you. And it is not easy to manage all the payments on your credit card. Having too many Credit Cards means having a high probability of falling in the trap of credit card debt. So you should avoid having too many credit cards.
2. Making partial or Minimum Payments
Making minimum or partial payments leads you nowhere. Rather it leads you into trouble as you then have to pay off the amount that you used at a higher interest rates. Plus all the charges such as financial charges, etc.
What’s the point in paying off the money at higher interest rates and with added charges?
You need to understand that Credit Cards are, only for your convenience and need to be paid off at the end of each month or due date.
It becomes difficult and rather impossible to pay off debt at higher interest rates.
So, avoid making partial or minimum payments.
3. Not Paying Your Bills on Time
If you are not paying off your credit card bills on time, you are incurring interest on the amount due on your credit card. Making this a habit, can lead you to irrecoverable credit card debt trap. Ignoring your monthly statement, not noticing the last of payment, you carry forward the debt to the next month and also with a higher interest rate. Extra charges dig a hole in your pocket and can ruin your budget. So take note by when you have to pay your credit bill and make sure that you pay the full amount before the last date of payment.
4. Exceeding Your Credit Limit
The market is flooded with a lot of goodies, and if you are on a buying spree then it will take no time to consume your entire credit card limit. This is a bad situation as it affects your credit score. And moreover, you have no amount to spend. Rather, it becomes impossible for you to manage the repayments on your credit card leaving you with no options for repaying the amount that you have used on your credit card. Exceeding your credit limit is dangerous and with proper and controlled usage of your credit card, you can avoid the situation happening to you.
5. Buying what you cannot afford
Everyone likes to shop and with a credit card in hand you become more inclined to shop. But wait as Credit Card does not give you free money, and leverage to shop for whatever thing you want. Moreover, it certainly does not provide the means to shop for things that you cannot afford. Well, you should never purchase a thing that you can’t afford. When it becomes hard for you to repay and falls above your budget, you should not purchase that thing. You must remember that credit card is not free money, and you would have to repay it. So shift gears and purchase things from your credit card that you can easily repay.
6. Lending Your Credit Card
Lending your credit card is not a great thing to do. Giving your credit card to your family members or friends is risky. The thing is that as soon as you lend your credit card you lose your control over it. The person to whom you have lent your credit card has all the freedom in the world to use the credit card according to his will and likewise. But ultimately it is you who has to pay the credit card bill. And if it is at all necessary to lend your credit card, make sure that you go along with your friend, relative or family member so that no misuse of your credit card can be done.
7. Maximizing the usage of Your Credit Card
Generally, up to 30% of your credit card limit can be used without spoiling your credit score. Beyond that, it considerably dangerous from the repayment point of view. So avoid unnecessary purchases and keep your credit card limit intact within the 30% mark so as to better manage your credit card.
8. Late reporting your lost or stolen credit card.
The late reporting of your lost or stolen credit card is probably one of the biggest credit card mistakes. The more time you take to report a lost or stolen credit card, the longer time the thief has to charge up your credit card account. So never be late and moreover be prompt to report a lost or stolen credit card. If you report the loss of credit card before any fraudulent charges are done, you have no liability on the charges on your credit card. So report the loss of your credit card as soon as possible.
9. Using Cash Advances
Cash advances on your credit card should be used only in times of emergency. Other than this you should avoid making cash advances from your credit card. Cash advances have interest charges, which can amount to hundreds of dollars. So Using Cash advances should be avoided at all cost.
10. Not Going through the Fine Print
Well, it may sound quite boring to read the terms and conditions of your credit card usage, but it are in-fact very important indeed. Moreover, you should take time and read the Fine Print before you make the credit card agreement. This can save you from going through a lot of trouble. In fact, reading the fine print should be your top priority when applying a new credit card.
Having exact knowledge of the terms and conditions, you know what the interest charges are, and are aware of each and every important point and can easily decide whether to apply for credit card or skip it. So not going through the Fine Print can be rated among the top credit card mistakes.
The ten credit card mistakes listed above are made by hundreds of credit card users around the world. So if you want to utilize your credit card rather than fall in the credit card debt trap, then avoid making these credit card mistakes for your good. Remember everything is in your hand. You can use your credit card or can misuse it. So it is better following the path of good and proper usage of credit card so that you do not fall in the debt trap.