10 Credit Card Mistakes to Avoid

by Michelle

credit card

Owning credit cards is a responsibility. They’re a convenience, not something to get you the good things in life you can’t afford. With this in mind, one should always enter into credit card ownership with knowledge and a sense of obligation. Here are some of the top credit card mistakes.

1. Only paying the minimum – If you have credit card debt and only pay off the minimum, you’re getting caught up in a viscous cycle. The credit card companies will love you though, as you only pay off a small part and they keep adding on the interest. Perhaps you’ll pay it off in a few years, perhaps not at all.

2. Giving a credit card an irresponsible teen – Bottom line? If you can’t trust a kid to save money you probably can’t trust him to be responsible around a credit card. Before giving your son or daughter plastic, ask yourself if you really trust them to pay their bill and not get carried away with the spending.

3. Using a credit card to buy what you can’t afford – See here’s the thing about credit cards. They’re not for you to use to buy a gaming system or big screen television – unless you have the money to pay for those things. Credit cards are so you don’t have to carry around a lot of cash or to use in the event of an emergency. A $3,000 television set you won’t pay off for 17 years isn’t exactly something you MUST have.

4. Having too many cards – Isn’t it convenient? You max out one card so you just use another. What happens when you max out a dozen cards, what will you do? Pay only the minimum on each? You’ll never get out of debt that way.  Having only a couple or a few credit cards is much better than signing up for every card out there. Having all those credit cards will butt you in the butt when you’re looking to take out a mortgage or car loan, so choose wisely. Having only a two or three major cards (Visa, MasterCard, American Express) is best.

5. Buying a credit card because you like the commercial or celebrity endorsement - This is probably self explanatory but getting yourself an American Express card because Jerry Seinfeld has one is just dumb. Take the time to research the best credit card for your needs – it shouldn’t have anything to do with celebrity endorsements.

6. Not shopping around for the best interest rates – If you pay off your entire balance every month (like yours truly, ahem) the interest rates might not be such a big thing to you, but this should be one of your most important considerations when choosing a credit card. Not all credit cards are alike, do yourself a favor and research the best credit card for your needs with the lowest interest rates.

7. Not shopping around for the best perks – Perks shouldn’t be at the top of your list of reasons for choosing a credit card, but they certainly help. Getting gas, cash back or frequent flyer mileage, in addition to a low interest rates, should help seal the deal.

8. Cashing those cash advance checks – No, no and again no. Shred those cash advance checks as soon as you receive them and don’t ever be tempted to sign. This will only put you deeper into debt. Moreover, they come at a heavy price, often with higher interest rates and fees.

9. Not reading all the fine print – Think you found the best card with the lowest interest rate? Read the fine print again. Does the rate skyrocket after the first few months or a year? Choose the card offering you the best lifetime deal, not the most immediate gratification.

10. Signing up for a credit card because of the free bottle of soda – Do you have representatives at your local mall offering a free 2 liter bottle of soda or dollar store watch just for applying for one of their credit cards? Don’t do it. Ask yourself why the credit card company needs to give out goods in exchange for your application. These spur of the moment sign ups don’t allow you much time to research and compare either. Never sign up for a credit card on a whim.


Image: newscom