In this guide, we will be outlining for you the most common credit card mistakes and how to avoid them. This guide and the information provided below will be of use to you if you are a first time credit card user, if you are unfamiliar with the inner workings of a credit card, or if you are currently considering sourcing yourself your first credit card and want to know more information.
So, What Are The Most Common Credit Card Mistakes?
There are of course, many credit card mistakes that people make on a regular basis. This is because credit cards can be complex and the way in which they work is often misunderstood. Credit cards are offered often without proper explanation, especially to younger people who have not grown up in the evolution of credit. If you have been considering a credit card then this guide could very well be of use to you!
Ignoring Your Own Spending
MoneySupermarket research found that two thirds of individuals who owned and/or used a credit card do not keep an accurate or an up-to-date track of their credit card spending – viewing their bank statements only once a month. This, as you can imagine, could have a whole host of negative repercussions. If you ignore your credit card spending then it could easily spiral out of control, and if you factor in potential interest payments then ignoring your own spending could lead to a spiral of increasing debt.
And How To Avoid This
Avoiding the above credit card mistake is simple and the resolution is itself easy. You could keep your spending in check should you decide to be vigilant. You could check your credit card balance daily, or even weekly; if you have your credit card set-up for online banking then checking your statements every day would be an incredibly easy thing. Keeping track of your credit card spending could also help you to monitor your overall outgoings which could in turn help you to save money in the long-term. Furthermore, there are some features built in to certain credit card/banking apps that let you set up spending thresholds as well as alerts that can let you know when you have spent a certain amount on your credit card or when you are nearing your credit limit.
Making A Cash Withdrawal At A Cash Machine
This would not seem like such a major issue should you not be well-versed in the inner workings and/or the uses of a credit card. If you haven’t read the terms and conditions of your credit card thoroughly you may also consider this a viable option – as it is of course with a debit card. However, as a general rule of thumb, credit card companies and providers will charge you for making a withdrawal of cash at an ATM (this includes ATMs both in the UK and overseas). In some instances, you may be charged a flat fee for this action, or you might be charged daily interest on the amount that you withdrew – or both – or a different type of charge. Unless otherwise specified in your terms and conditions, withdrawing money at a cash machine is never free.
And How To Avoid This
If you find yourself in need of cash, you should where possible use your debit card if you are able. To avoid temptation, you could leave your credit card at home whenever you go into town or shopping, for example.
Only Paying The Minimum
We appreciate that it can be tempting to only pay the minimum amount off your credit card bill each month, especially as the minimum amount requested can be only a fraction of the total amount owed. If you are paying interest on your credit card amount then only paying the minimum over an extended period of time could end up costing you a considerable sum. Of course, the one caveat with this common credit card mistake is if you are in a 0% interest period – however, paying your credit card debt off in full (or paying as much off as you can each month) is advisable and would be the industry recommended method of credit card management.
And How To Avoid This
You could be stricter with yourself regarding the payment of your monthly credit card bill. You could resist temptation (the allure of only paying off the minimum can be great) and pay off as much as you can when you can. Because the more you are able to pay off each month then the quicker you will be able to pay off the debt total.
Going Over Your Pre-Agreed Credit Limit
Once you have been given your credit card it will come with a credit limit attached. This will vary massively, but the credit limit essentially refers to the maximum amount of credit that you can put onto the credit card. If you go over or exceed this pre-agreed credit card limit then you will almost certainly be charged for doing so with the actual amount and methods of fee generation varying between banks.
And How To Avoid This
If you can you should always attempt to remain within your pre-agreed credit limit whilst also paying off the balance in full at the end of the month.
Missing A Credit Card Payment
Missing a credit card payment could be a costly mistake. Charges and penalties will vary from bank to bank but will almost always involve a flat fee of around £10 – £20 for a missed or late payment. Your credit report will also detail every missed payment on a credit card as well as every other payment missed across the board. This could negatively affect your applications for credit in the future. Lastly, if you had taken out a credit card with a special offer attached, a 0% interest free period for example, then missing a payment could then lead to your bank withdrawing the special offer.
And How To Avoid Us
Avoiding getting into the habit of paying your bill on time each month. You could make a note of your due date, learn it, and then set yourself reminders so that you are certain to never miss another payment again. You could also set aside each month’s bill amount before it is due so that you are certain that you will be able to pay it on time.
Payday Loans From Wizzcash
Here at Wizzcash, we understand that a credit card may not be suitable for every individual or situation. If you are looking for options regarding emergency funding then you may want to consider us, as a payday loan lender we recommend that our loans only ever be applied for in times of financial emergency. There are also many other options available to you, such as a personal loan for example. We would always recommend that you research all of your options before taking out any form of loan or credit. To learn more about us as a company please do so here. Or, to learn more about our payday loans please visit our dedicated page.