Credit card mistakes are not uncommon especially among the Aussies who are using their first credit card.
A credit card has many advantages and while it may seem like a piece of plastic that holds your money, appearances can be deceiving and can cost you in the long run.
This is why we created this list of credit card mistakes you need to avoid. You shouldn’t be frightened to use your credit card, but you must understand how it works and how to avoid certain things to enjoy its benefits.
Forgetting about the Interest Fees
Be careful of paying the interest on your credit card; you will lose a lot of money in the process. Limit your spending so that you can keep your balance at a steady place. It may sound a bit off in theory but trust us because it works. This is one of the most common credit card mistakes so try your best to avoid it.
Using the ATM
Whenever you need cash, you will go to an ATM. But did you know that any transaction can charge you a fee? It can attract up to twenty percent interest when the operation is activated. Keep this information in mind and think if it’s worth it to use the ATM or not.
Using the Rewards Scheme
When it comes to credit card mistakes, people usually blame the rewards systems, but they are the ones going for such “offers.”
The rewards system is simple; to earn points, you will have to spend money using a certain card. By spending the specified amount, you will get earn enough points to get certain rewards.
Don’t fall into this trap because it is easy to get hooked on spending more to earn more points. However, some credit card providers do offer great rewards, if you know where to look for them. A mistake is to refuse such rewards or not take advantage of them at all.
Having Too Many Cards
Having too many credit cards can be helpful, but if you have no idea what you are doing, you will get in financial trouble quickly. Not only will it affect your credit history, but you will end up paying an interest fee multiplied by how many cards you neglected.
This can result in a huge money loss and can make lenders think twice before lending you more money. Two or three credit cards is enough as long as you are organised with your money.
Paying Your Debts
Significant debt can take you a long time to pay, and it is more advantageous to use a personal loan than a credit card transfer. Do the math or ask an expert on how to pay that loan without using your credit card.
If you have no idea how bad this habit is, just think of it this way: every month, you will have to pay one or several debts using your credit card. That means that your interest fees will activate for every transaction. Now add to that the interest fees you get from using your card while shopping.
When it comes to credit card mistakes, this combination has to be one of the most misunderstood and will drain most of your money.
Not Being Patient
Before accepting a credit card, you must first look at what it offers. You must check the interest rate it comes with and other taxes that you probably haven’t heard of. Check the Internet for sites that compare credit cards and establish whether that credit card is for you or not.
If you are not a fan of using a credit card, you can find alternatives. But if you want to get the most out of your card without having to deal with credit card mistakes, professional advice is recommended.
Using Your Credit Card for Everything
There are many credit card mistakes, but the biggest one is using your credit card for every type of transaction. Yes, a credit card is like your pocket money, but it will charge you whenever you make a purchase.
Some lenders can give you a special sum that you can access when you need it the most. Think of it like a loan that is always there, and it is easy to access. This service can be helpful. However, most people abuse it and end up having to pay for it with added fees and rates.
Using Money You Don’t Have
Some people prefer using credit cards to buy things that they cannot afford or use it when they don’t have money. Be careful with this habit because you might get a nasty surprise when you have to put the money back.
So beware of the mistakes you could make from excessively using credit cards. If you need any professional advice, call us now on 1300 137 778 for a quick chat.