Common Credit Card Mistakes
Credit cards are supposed to be a tool to help us out, and make our lives a little easier or more enjoyable. However if they aren't treated with the proper respect, then credit cards can help in other ways—like creating a huge pile of debt that you can't easily overcome. The best way to prevent this problem from happening is to be aware of the more common credit card mistakes, and avoid them like the plague.
- Ignoring statements. Perhaps the single biggest mistake that people can make when it comes to credit cards is to ignore their monthly statement. This doesn't necessarily mean that people set the statements aside and don't pay it, though that does happen. Instead what typically happens is that people don't look over their statements for any errors or unknown charges. Spend at least a few minutes to look over your statement and make sure that everything is the way it should be.
- Not paying bills. Another common problem is that many people simply don't pay their bills like they are supposed to. About the only way to avoid this problem is to actually pay what you owe, and pay it quickly. The best policy to follow is that you simply don't use your credit card to purchase something that you can't pay back fully your next paycheck.
- Paying only the minimum. Many credit card holders believe that all they have to do, to stay in good standing with their credit cards is to pay the minimum. While this may generally keep the credit card companies happy, you will never really pay off your bill completely. In fact, there are some credit card companies that view paying only the minimum as a slow pay, and ding you accordingly. In addition, interest rates apply to anything that you haven't paid off, and often the minimum payment is only good for paying off the interest that you owe.
- Buying to earn "rewards". While it is nice that credit card companies offer "free rewards" for using their cards, what many people forget is that nothing is really free. This type of offer can easily lead people into using their cards more than they can afford, simply in an attempt to get the next batch of rewards. A good rule of thumb to remember about rewards is that on the average any reward that you get will only be about one percent of what you purchased, while your annual percentage rate is going to be at around ten percent or higher. You do the math.
- Not paying attention to your credit rating. Another common mistake that many people make is that they do not keep an eye on their credit rating. Just about everything that you do, like not paying the bills or only paying the minimum, will affect your credit rating. In addition to that, every time that you open a new credit card account your credit rating will take a hit.
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