Credit Card Pitfalls to Avoid

Credit Card Pitfalls to Avoid

Getting a new credit card can be exciting. It instantly gives you access to funds you don’t necessarily have. It makes purchasing easier and those items that were previously out of reach become accessible. However, with this new found credit line comes a few pitfalls that every consumer needs to avoid. Don’t look at this as an opportunity for unlimited financial gain. Look at this as an opportunity to build up credit and make some smart financial decisions.

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Using a Balance Transfer Card for Purchases

Signing up for credit cards to transfer a balance to a lower interest rate is a good idea. Many people seek out different credit cards at MoneySupermarket to see which one offers the lowest rate with the best terms. Once you transfer a balance, do all that you can to pay it off. Then, do not add new charges to the card. It can be tempting to start charging on the card but the chances are that the lower interest rate will go and the terms will no longer be as beneficial.

Getting Cash From Your Credit Card

It can be tempting to see your credit card as an ATM card. While many companies offer customers the opportunity to get cash out from their available balance, the interest rates are typically higher than traditional purchases. Borrowing $100 from your credit line could end up costing you hundreds of dollars in interest if not paid off right away.

Skip Cashing the Credit Card Checks

Much like taking a charge card to an ATM machine, the checks that come along with your credit card statement can also be used to obtain cash or pay for something, such as a utility bill. In most cases, the checks are just like taking out cash. The interest rate is often higher and once again, you can find yourself in way over your head in a short amount of time. Only use these checks if it is a real emergency. Exhaust all other options first.

Charging Just for Rewards

When you sign up for a card with reward points, you automatically assume that you are going to be getting tons of points for gift cards or airline miles. It often takes a lot of charges to get the smallest of rewards. Before signing up, read all of the fine print and make sure that you know exactly what you need to do. Don’t just charge things to gain reward points. Unfortunately, you may end up with a fifty-dollar gift card but a ton of debt to pay off.

Skipping Over the Free Benefits

Reward points are not the only benefits to credit cards. Don’t skip over some of the free things that come along with them. Check to see if you get any extra warranties for products that you pay for using the card. You may also end up with travel insurance free if you make the purchase on the card. These benefits add up quickly. Read the fine print to see what you are entitled to.

Being Extra Late With Payments

Every once in a while, things come up and you can’t get your payment in on time. Don’t let it be a habit. Make sure that you always pay on time and more than the minimum if possible. At the very least, do not let your credit card go past sixty days overdue. You can be sure that your credit report will be affected negatively.

Article written by Lucy at Money Supermarket

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