Top Credit Card Mistakes
When you're dealing with credit cards, you're playing with fire.
Unfortunately, there are plenty of people out there who don't
realise that, and make all sorts of dangerous mistakes with
their credit cards every day.
If you don't set up any kind of automatic payment, then it can
be tempting to just put your credit card bill on a pile and get
to it when you have time. Before you know it, a few weeks have
gone by and you're late. If you leave it to the deadline, you
might find that the payment won't get there quickly enough -
it's not a deadline for sending the money, it's a deadline for
them receiving it.
Paying late is a big mistake for an awful lot of reasons. You
will almost certainly be charged a late payment fee, and your
late payment will go on your credit report for everyone to see.
You may also find that you lose any good rate you had, and your
debt is automatically thrown onto the very worst rate the
To avoid late payment, you should always post your payment a
long time before the due date (at least a week). If you've left
it to the last minute, phone up and try to pay that way.
Being Taken in By Rewards.
It is never, ever worth getting a higher-interest card simply
because it offers some kind of loyalty points, flight miles or
whatever. Even if it offers a cash reward, it is unlikely to be
more than you would pay in extra interest - after all, why would
they give you free money? All 'rewards' do is pay you off with
your own money to make you feel like you're getting something
for nothing. You're not.
Seeing some people opening their wallet or bag is a scary
experience. It looks like they have about a hundred credit cards
in there, some of which they haven't used in years. They have
trouble keeping track of all the different cards, balances and
interest rates. Don't be one of these people. You should limit
yourself to a maximum of three cards at a time - any more starts
to make you look over-committed in your credit report, and could
get you turned down for a bigger loan.
Maxing Them Out.
Your limit is just that: a limit, not a minimum! Whatever you
do, don't get a card and immediately spend your whole limit.
This looks very bad. It is better to spend about halfway
regularly and pay it back. Wait for the company to increase your
limit (which they quickly will), and then you'll get that extra
money without the stigma of having a maxed-out card.
Not Reading the Terms and Conditions.
Finally, as ever, don't sign anything you haven't read! I know
it's hard going and you're busy and all, but if you can't manage
to read the terms and conditions then you shouldn't get the
card. Pay special attention to any future increases in rates,
and what kind of fees you can be charged.