Friday, February 06, 2009

Credit Cards: Top 7 Mistakes that Card Holders Make

You need to manage your credit cards wisely. Otherwise, you may stop up in financial trouble. Unfortunately, there are many who don’t realise that they may be making huge errors with the usage of their credit cards. Here are top 7 credit card errors that card holders make:

1. Paying Just the Minimum Sum.
The minimum sum of money is just an amount that you must pay back each calendar month to avoid defaulting on the debt. If you pay just the minimum sum, the remainder of your outstanding is subject to interest computations. Always wage back more than than the minimum sum of money or do full payments to avoid credit card debt.

2. Making Late Payments.

If you don’t set up any sort of automatic debit entry payment from your bank account, then it can be alluring to just set your credit card measure aside and get to it when you have got time. Before you cognize it, a few hebdomads have got gone by and you’re late. If you go forth it to the deadline, you may happen that the payment won’t get there quickly enough.

Paying late is a large error for an atrocious batch of reasons. You will almost certainly be charged a late payment fee, and your late payment will travel on your credit report. You may also happen that you lose any good rate you had or any discriminatory rates that you may in the hereafter receive.

To avoid late payment, you should always post your payment a long clip before the owed day of the month (at least a week). If you’ve left it to the last minute, phone up and seek to pay that way.

3.Being deceived by Offers from Credit Card Companies.

It is never, ever deserving getting a higher-interest card simply because it offers some sort of loyalty points, flight miles or whatever. Even if it offers a cash reward, it is improbable to be more than than you would pay in extra interest – after all, why would they give you free money?

4. Collecting Cards.

Some think it looks good on them to have got a wallet choked full of credit cards. Especially if the wallet is packed with gold and platinum ones. But enviousness not! These card holders may well in a state of affairs of having to maintain path of all the different cards, balances and interest rates.

In fact, you should restrict yourself to a upper limit of three cards at a time. Any more than starts to do you look over-committed in your credit report, and could get you turned down for a bigger loan.

5. Charging More to Earn More Points.

The credit card companies are adroit in rewarding you with more than than fillip and loyalty points if you charge more during a publicity time period or a holiday season. You may stop up with shopping that you don’t need just so as to earn more than points. If you can well afford all your purchases, fine! But if not, you may be in for a monolithic concern when your measure comes!

6. Using Your Credit Limits to the Max.

Your bounds is a upper bounds limit; not a minimum one! Whatever you do, don’t get a card and immediately pass your whole limit. This expressions very bad. It is better to pass about halfway regularly and pay it back.

7. Not Reading the Terms and Conditions.

Finally, as ever, don’t mark anything you haven’t read! I cognize it can be tough to read all the mulct black and white but if you make not cognize what you are getting into, then you shouldn’t get the card. Wage particular attention to any hereafter additions in rates, and what sort of fees you can be charged.

No comments: