9 Common Credit Card Mistakes to Watch Out for
A Credit Card gives you access to finance and allows you to build your credit history and score. Through a Credit Card you can demonstrate to your bank that you are a responsible borrower, and this, in turn, will help you get attractive interest rate when you take a loan in the future. While Credit Cards are a boon, it is prudent to use them wisely. It is always easy to get carried away when you don’t see actual cash changing hands.
Here are some Credit Card mistakes that you should be aware of, as they can have an adverse impact on your finances and credibility as a borrower.
1. Withdrawing Cash from an ATM
Credit Cards are high-interest cards. So, if you use your card to withdraw money from an ATM, not only will you end up paying a high interest on the cash advance, but you will also spoil your creditworthiness. When you withdraw cash using your Credit Card, it is a sign that your bank account does not have funds. This paints a poor picture of you for lenders who will be wary of extending credit to you in the future.
2. You are Unclear about the Terms and Rewards
Reading and understanding the fine print can be a nuisance. However, if you don’t, you may end up with losing out on the benefits of owning a Credit Card. For instance, if Credit Cards have 0% APR and you don’t transfer the balance, you will lose out on this benefit. Likewise, some cards offer miles each time you use them. However, if you are not a traveller, the miles are a waste as you don’t redeem them. So, ensure you read the terms and conditions so that you know what you are entitled to. MyMoneyMantra can help you with the Best Credit Card Offers.
3. Missing a Payment
If you decide to skip paying for your card usage even a single month, it will have a long-term effect. Not only will your credit history be adversely affected, but the interest on the unpaid amount will also add up and skyrocket the amount. With a history of non-payment of Credit Card dues, lenders will not view your loan application favourably.
4. Holding on to Unused Credit Cards
Today, it is common to get attractive offers on new Credit Cards. You may end up applying for a whole lot without actually using them. Keeping cards that you don’t use is something you need to give a second thought to, as it will damage your credit rating. Also, there is a risk of fraud as these cards can be used by someone else to buy things online without your knowledge. Instead, hold on to the cards you use regularly and do away with those that you have never used.
5. Applying for Innumerable Credit Cards
The internet is full of Credit Card offers. You can apply for Credit Cards online while sitting in the comfort of your home. Just like you should not keep unused Credit Cards, you should not indiscriminately fill out Credit Card application online. When you apply for Credit Cards within a short span of time, it affects your credit rating. Instead, do some research to determine the likelihood of getting accepted before applying.
6. Not Checking Your Monthly Statement
Your Credit Card statement gives you an itemised list of your monthly spending. By checking the statement, you can curtail frivolous expenditures and also ensure no one else is misusing your card. If you find something that you did not buy in the statement, you have to raise a dispute with the card provider within a specified period. Otherwise, you will have to foot the bill.
7. Allowing Rewards to Expire
One of the biggest perks of choosing specific Credit Cards is the rewards program. While some rewards don’t expire, there are others that do if you don’t redeem them within a specified period. So, if your credit card choice is based on rewards, capitalise on it to offset the other costs you have to incur due to card ownership.
8. Not Reporting Stolen or Lost Card
Most banks and Credit Card companies have provision to protect cardholders should their card get stolen or lost. The key is to report the loss or theft immediately as it will help minimise the damage. Otherwise, your card could end up in someone else’s hands, where it can be used, and you will end up having to pay for the purchases made.
9. Frivolous Spending
It is easy to buy things that you don’t need. It is easy to spend without forethought when you are not paying cash up front. That is why it is necessary to check the monthly statement to see where you are spending your hard-earned money. You will be amazed to learn that there are many purchases that you could have avoided. So, learn to differentiate between need and impulse, and you should be able to curtail unnecessary purchases. This will help you save money.
It is essential that before applying, you compare Credit Card offers. You can do this with ease on MyMoneyMantra, where you can also fill out Credit Card application online or get guidance and expert recommendations from qualified financial experts.
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