10 Common Credit Card Mistakes that Can Cost you a Fortune
Most of the people need to have a credit card as this plastic card makes it quite easy and convenient to pay for purchases without carrying cash. Not only credit card offers a wide range of privileges and rewards to its cardholder but also helps in improving the credit score and build a positive credit history.
A credit card can help you in several manners but this financial tool might cause serious financial damage if it is not used responsibly. Appropriately utilizing your credit card is a key to getting out of debt and maintaining a good credit score. Making any of these credit card mistakes could damage your credit and cost you a fortune.
Paying Only the Minimum Due Amount
One of the costly mistakes you could make with your credit card is carrying forward a balance and making only the minimum due payment instead of paying the balance in full. Paying the minimum due amount on your card not just increases the timeframe needed for clearing off the outstanding balance of your credit card but also increases the interest that you need to pay on your credit card. So, avoid paying the minimum payment otherwise you will be trapped in debt for several months or even for years.
Making a Late Payment
If you don’t pay even the minimum due amount on time, every month, you will levy a much higher late payment fee as well as the interest rate. And paying your credit card bills late repeatedly can take a toll on your credit score.
So, don’t let your payment due date pass you by. Maintain a good record of timely payments to build an excellent credit score. If you keep forgetting to pay your credit card bills on time, you can opt for email, text, or phone reminders of your payment due date. This will make it easier for you to remember your due date. However, you can also choose to have the payment auto-debited from your bank account as it will make it a little more convenient for you to pay your bill on time.
Lending Your Credit Card
When you loan your credit card to someone else, it is obvious that you’ve no control over the purchases they make using the card. In the end, you will be responsible for clearing your credit card balance. So, never loan your card until and unless you are fully prepared to pay for all purchases they make.
Not Going Through Your Billing Statement
If you don’t go through your credit card statement, you might miss your payment due date or minimum due amount of that particular month. Ignoring completely your billing statement could also cause you to miss a very important announcement regarding your credit card terms and conditions.
Your card billing statement is often the first forewarning to any fake or fraudulent activity on your credit card account. So, it is advised that always go through your billing statement to check whether all the charges are correct and all of that payments have been associated with your credit card account directly.
Letting Your Credit Card Account Get Charged Off
A charge-off is one of the worst things that could affect your credit score negatively. The charge-off listing will remain stick to your credit report for 7 years. In addition to this, this account status could make it difficult for you to avail credit cards and other types of loan in the future.
Being Late to Report Your Missing Credit Card
The longer time you take to report a missing card, the longer time the thief has the privilege to charge up your account. If you report your lost or stolen credit card before any fake charges are made, you’ll be not liable for any sort of fraudulent charges. That is why it is very important to report a lost or stolen credit card as soon as possible in order to limit your liability for fraudulent charges.
Applying For Multiple Credit Cards At Once
When you apply for a credit card, the credit card provider will want to check your creditworthiness and they check it by taking a look at your credit report.
And if you apply for multiple credit cards within a very short period of time, you might notice that rejections are more frequent as credit card issuer might get suspicious regarding the sudden flow of credit card applications. Due to this, your credit score also drops down significantly.
It is advisable to apply for new credit cards one at a time based on your requirement.
Taking a Cash Advance
Most of the credit cards enable you to withdraw a portion of your available credit limit into cash in the form of a cash advance. While it might sound a very nice idea if you are experiencing a cash crunch, it is one of the costlier mistakes you could make with your credit card.
You know, why?
Credit card providers levied a high rate of interest on cash advances than they charge on regular purchases. In addition to this, there is no grace period on cash advances. Thus, interest will begin accruing immediately. Plus, you will also need to pay an upfront fee in order to the process the cash advance transactions. Henceforth, you could end up paying substantially more just to withdraw cash via your credit card.
Not Comparing Credit Cards before Opting One
When comparing credit card offers Dubai, you should give close attention to the annual percentage rate offered on the credit card. Rate of interest differs from one credit card to another. So, compare credit cards based on their features, benefits, offers, fees & charges to opt for the right one.
Ignoring the Fine Print
Getting a credit card is indeed a very important financial decision. Before availing a card, make sure you read all the terms & conditions that are associated with the particular card in order to stay well-informed.
The more information you get about your credit card, the easier it will for you to make the most of it. Part of that effort includes knowing about these biggest credit card mistakes and avoiding them at all costs.
So, develop good credit card habits and make sure you use it responsibly. By doing so, you will not only able to enjoy a wide range of credit cards offers and benefits but also you will be able to maintain a good credit score.