10 Common Credit Card Mistakes
In no particular order, the following are viewed as being the
top 10 common credit card mistakes:
1. Applying for a card and limit you cannot afford to repay Most
people have bad debt management skills and are swept away with
the fact that they have 'x' amount of pounds as their limit.
They rarely consider paying the card and have "maxed" the card
out in a few months. They then spend years trying to repay the
card!
2. Applying for too many cards Not content with having one
credit card that has reached its limit, most of us jump at the
chance to apply for a new card as soon as it is offered to us.
Then, having learnt nothing from our previous experience, we
rush and buy all the things we couldn't because we had to save
money to repay the first card. Suddenly we have twice the
trouble!
3. Using the cash advance function At least with purchases made
for goods and services we should get around 50 days interest
free credit, but with a cash advance we start to pay interest
from Day 1. Using your credit card to cover your day-to-day cash
needs is a very costly mistake!
4. Only paying the minimum repayment Credit card companies love
us and it has to be their favorite of the common credit card
mistakes, but with credit card interest rates as high as they
are, if you are only making the minimum monthly repayment then
you should know it'll take you years to repay the debt and
you'll have repaid the debt many times over in interest payments!
5. Maxing out the card Another common mistake and one that half
the country is at fault of is maxing the card out. If you have
maxed your credit card out it's a sure sign that you are living
beyond your means, so what hope have you got of repaying the
debt without a radical overhaul of your debt management skills!
6. Late payments Late payments subject you to extortionate
interest rates and set fees, very profitable for the credit card
company and a very unfortunate mistake for you to be making!
7. Not checking your statement A common error when we start to
feel the pressure of a debt burden is to start to ignore the
fact that the debt exists in the first place. If this happens,
the chances are the fees and charges will start to accrue and
the next thing you know you are not making the minimum
repayments. Suddenly you are the subject of more fees and
charges. And so the cycle goes on!
8. Adding a secondary user Although some may not consider this a
mistake, if you add a secondary user to your credit card account
you've suddenly lost control over the spending on your card - no
matter who the person is. Now bills can rack up on your account
without your normal controlling self, as they are being
transacted by a third party (who you authorise). A credit card
company's dream.
9. Using your card overseas For every overseas purchase you make
you could be subject to fee and a lousy exchange rate. So, even
if you are the perfect credit card customer and pay your bill in
full and on time, suddenly the card issuer is making money out
of you!
10. Not reading the credit card agreement In your haste to get a
credit card you have not read the terms and conditions of the
agreement and so you are not aware that if you act in a certain
way or do something you should not, then you are likely to be
paying for it. But the real reason why this is on of the common
credit card mistakes that issuers love to see is because if you
don't read the agreement carefully they can charge you for
additionals you may have been able to opt out of - such as
credit card insurance (a big earner for card issuers!).