Credit cards are a part of many of our daily lives. They are everywhere. And because they are such a part of the fabric of life, we somewhat take them for granted. And when we take such a powerful tool for granted, we often abuse and misuse them. The consequences of doing so can be dire. We look at some costly credit card mistakes.
It’s weird in a way how we take so many of our financial products for granted. We accept the bank account we have, the credit card we use. We never question if there are better options out there. and for those two examples, there almost always are better options. Having taken out a product we give it little more thought and just use it aimlessly. Well, don’t. Change your habits. Always look to have the best product, be it travel insurance, bank account or credit card. Get the card that is best for you, and saves you the most money.
Many people rush into getting a credit card without thinking about why they need that particular one. They do not do research. Your credit card should reflect your individual needs. Why will you use it? Is it to move debt across to or for purchases. When you decide what your card will function as, then you should check the most appropriate card for those functions. Many fail to do this, and just get any old card. Often one their own bank offers, just for the convenience, Getting a credit card is a simple process whoever you use, so convenience should never be a factor in making a choice. Use credit card comparison tools to make the right decision every time. And look at reviews to ascertain what others think of the cards.
Let’s be honest, many of us never read a simple page of instructions for a piece of tech, let alone read the fine print on a credit card or loan. But you really need to. Always take the time to be 100% sure that you know exactly what you sign up for.
It’s easy to let debt spiral out of control. And having a large number of credit cards is a good sign that it is happening to you. There really is no need to have many cards unless you struggle with debt and are turning to them for funds. Many might use them for offers, make significant savings, but then keep the cards going. Credit companies depend on people doing this. Then the offer expires, the costs hit, and suddenly the card was not such a good idea after all. If you fail to pay off every balance each month, you’re going to get hit with (sky-high) interest charges. If you don’t keep track of which cards earn the most rewards at various merchants, you’re not going to get the most out of the cards you possess. The more cards you have, the less likely you are to be checking your balances, when terms change, and what fees are being applied.
If you get a card for an offer or reward system, then make the most of it. Otherwise there is little point having it. Just be responsible at the same time. If you use it for purchase rewards, ensure you pay off what you spent at the end of the month. Do not consider it as free money as some seem to do! Most credit cards also come with additional perks, such as cheap travel insurance. See what you can get on your card.
Ticking that box that says minimum payment only is always a sign that you are struggling with debt. And it will cost you more money in the long term by ticking that button. Where possible, always look to pay off more than the minimum payment, in order to restrict interest charges as much as possible. A knock-on effect may be damaging your credit. Always keep on top of your credit card accounts at all times. Prioritise higher interest cards and look to move money around to restrict fees.