Credit cards are quickly becoming the most popular mode of payment. And that's no surprise. Used properly, they can provide numerous benefits: free insurances that cover purchases, interest-free period, cash back or rewards on your spending, available funds in case of an emergency situation. On the other hand, unwise credit card management can cost you dearly: you can lose money and spoil your credit rating. If you want to ensure your successful financial life, there are common credit card mistakes you should avoid.

Too many credit cards

Having fewer cards in your wallet makes it easier to track expenses and control your total level of credit card debt. You don't need to worry which plastic you use, which plastic you don't use, how much money are on this credit card and what the credit limit is on that credit card.

If you have credit cards you don't use anymore, contact the issuer and arrange to close the accounts. You will have fewer credit cards tempting you to spend money and therefore fewer credit bills to pay.

Late payments

Making late payments leads to numerous consequences you would prefer to avoid. First of all, you will be charged a late payment fee - even if you're just one day late. Then, the late payment will go on your credit report for everyone to see. That will negatively affect your FICO score. Moreover, you can be switched to a default APR which is actually much higher.

To avoid late payments, you should always mail them at least 10 days in advance. If you've left your payment to the last minute, try to pay by phone.

Making the minimum payment

If you are making only minimum credit card payment, then you should know that it could take years to pay off your balance in full. Just imagine: if you spend $2,000 with a no fee credit card offering 18% APR, it will take you about 30 years to repay it. The total amount of the interest paid will be $5,000. That's why you should pay more than just a minimum due. You will spend less time to cover your debt and pay less interest in the long run.

Taking cash advances

When you withdraw cash from your plastic, you lose many benefits. You immediately start accumulating interest because there is typically no grace period for cash advances. Then, you need to pay special fees and higher interest rates. And you don't earn any rewards or cash back on your withdrawals! That's why plan ahead your purchases and avoid using your credit card at ATMs.

Not reading the credit card agreement

Being in a hurry to get a credit card, we often don't read the terms and conditions of credit card agreements. However, there is the most important information about future increases of rates, fees you can be charged, the way of calculation of your APR, the grace period and fee schedule. You need to be aware of all terms before you submit your application.

Not checking your statement

Checking your statement will help you pay your bill promptly, as well as allow you to make sure that all the charges are correct. Check your credit card statement as soon as it arrives. If you wait too long to dispute a charge, it means you are essentially accepting it.

Copyright © 2007-2010 www.unioncreditreport.com. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Share Opinion:

           

Comments

No Comments

If you have something to say, please leave your comments below.

Your Name: *
Your Email:
Your Comment: *
Enter Number from Picture: *
* - Required Fields