By: Mirage Ratnayake
The credit card is probably the most financial instrument, but also the most misunderstood. There is nothing wrong with having credit card, but filing to use it properly could get you into so much trouble. By using your credit card wisely, you can be sure to get the most out of this important financial device. You will build up your credit score and earn reward rather than be charged fees and interest.
The following are ten most credit card mistakes that people commonly make.
1. Not knowing the interest rate
This is serious mistake that lot of people make. It’s important to understand and read the fine print to find out interest rate behaviors.
Sometimes they will be different rate of interest charge when you first joining in and after certain period of time that can go back to no charge. But this depends on the individual circumstances.
2. Not asking for a better deal
If you have been with a same financial institution quite some time, why not ask some better deal. You might can ask for them to annual fees or late fees wave. The worst they can say no all you have to do is ask.
3. Ignoring the introductory offer
Introductory rate credit cards are special deals offered by financial institutions. Credit card companies may give you no or low interest on purchases or balance transfers for a limited time period to encourage you to open an account with them.
Introductory rates usually minimize significantly or completely waive these interest charges. This give you chance to borrow money for free or even pay of another credit card with balance transfers. The rate is either lower or zero percent and the time period of the honeymoon rates ranges from three month to one year.
If you are planning to use introductory rate credit cards to save money make sure find out how it works and then apply.
4. Obtaining cash
The interest rate on cash advance is typically much higher than when using the card to purchase goods or services. So beware fees and charges if you’re using your credit card to withdraw the cash.
5. Making minimum payments on your credit card debt
Credit card companies intentionally set the minimum payment low to encourage more card usage and extend the time it takes you to pay of f the balance, thereby earning them more interest it can takes years to pay off a higher interest credit card If you only make minimum payments.
6. Over spending
If you’re unable to pay the amount on certain time you should avoid over spending on credit card. Responsible use of credit cards will help you establish a solid credit rating and avoid financial problems.
7. Having too many cards
Too many cards can hurt your credit file an also it’s easy to falling victim of credit trap if you start spending out of control.
8. Paying late
Paying after the month due date can result in late fees and an increase in your interest rate.
9. Unnecessary credit card purchases
One of the biggest contributing factor is to credit card debts is the simply act of buying something because he or she can. When excessive buying is based upon “want” and not based upon “need” the sky is the limit and so is the possibility of debt. Credit cards are not the treatment for lack of cash.
10. Not checking the monthly statements
Your monthly credit card statement shows your spending and charges occurred by the bank. A sometimes credit card company makes mistakes on charges so it’s a good habit to look at your statements every month.