5 Common Credit Card Mistakes to Avoid for First Users
Credit cards can help users to establish credit and make purchasing for things a little easier. However, having a credit card also require users to take a huge responsibility for it. Mismanagement of the credit cards will only end up increasing the cost of the credit cards and getting easily into debts. There are several mistakes that many users tend to commit when using credit cards.
For new credit card holders, it's of greater importance to avoid some common mistakes if you want to make most of the credit card advantages.
1. Not Read Through The Fine Print.
Many people learn credit card terms from salesman or advertising leaflets without reading the detailed content on the fine print. In fact, the bank only puts eye-catching beneficial terms on the flyer, while it's the lengthy terms and hidden conditions you ignore that will cost you afterward. Therefore, try finding the answers to the questions listed below when applying for a new card:
Is there an annual fee?
Is there a late payment penalty fee?
What's the interest rate?
How much it charges on a cash advance?
What's my credit limit?
Are there any other fees?
Knowing your credit card terms clearly can keep you away from being caught off guard by unexpected costs or mistakes. And it's suggested to review your credit card terms once or twice a year for better use.
2. Applying For Too Many Credit Cards.
By applying for a lot of credit cards, people mean to get a high credit limit and maybe get various beneficial offers provided by different kinds of cards. But the truth is that the more credit cards you have, the bigger chance you will have of getting deeper into a huge debt. Many people get into a malicious cycle of needing a new credit card to pay off the one before. Also, having too many cards will also impact both your credit score and your ability to borrow money from the bank since the lenders may start to question your motives and financial status.
3. Making Late Payments
A late payment adds may result in late penalty fees and it could damage your credit score which will make it harder for you when applying for loans or credit cards in the future. To ensure you make payments before the deadline, you'd better set online reminders or automatic payments, so you will never miss a payment.
4. Only Making Minimum Payment
Only making the minimum payment on your credit card balance each month can lead to additional interest and debt. Moreover, it would also take you more years to pay if off. New credit card holders often make purchases they cannot afford and then pay only minimum money each month, then their debt will increase gradually. Finally, the day will soon come when they can't make even the minimum payments. It's best to pay off balance in full each month, and if you cannot afford that, try increasing your monthly credit card payment which can help you pay off your balance sooner at a lower cost.
5. Taking Cash Advance
Cash advances allow cardholders to borrow some cash from their account for something emergency. Cash advance often charges high-interest rate and late payment penalty fees. New credit card users can be tempted to take some money out through a cash advance. Many of these cases end up with getting the users into debt traps because of the high rate and additional fees.