6 mistakes to avoid when using Credit Cards
Owning a credit card is an asset for consumers in today's time. One of the biggest benefits of having a credit card is that you can build your credit score. The credit score ranges between 300 and 900, which rates your creditworthiness. When you have a higher credit score, then it is easier for you to get a loan and access other financial products.
With Credit Cards, you can earn travel miles, get fuel surcharge waivers and also get shopping discounts at big malls and stores. It like free money in your hands as you can use the credit card to get these extra benefits. Sometimes, exclusive offers are also provided by the credit card companies. A credit card also enables you to make bigger purchases and reap the benefits by increasing the rewards earned.
To make use and get best benefits of credit cards and build a higher credit score, you must build positive consumer habits. Once you are on a shopping spree or using your credit card in the way you like, make sure to avoid these common credit card mistakes people often make:
1. Forgetting to pay your bill on time
If you do not pay your credit card bill on time, then you will be charged with late fees and interest on your billing amount. If you forget to pay your credit card bill over and over again can considerably increase your costs and result in a lowered credit score. The best option is to put reminders in your calendar or a smartphone app. Other than that, even best is to automate your credit card payment every month. For that your savings account must have sufficient funds.
2. Not choosing the right card
As today there are a number of credit cards available whose benefits vary from collecting travel miles and reward points to offering exclusive deals on shopping and dining out. You must choose a card that fits your lifestyle. For example, if you love travelling by air often, it is a good idea to go for a card that promises travel miles as it can significantly bring down your travel cost. On the other hand, if you are a foodie and love eating out, you can go for a card with dining-out benefits.
3. Not understanding fees and charges
You have to pay an annual fee while using the credit card. you must check what's the exact amount you have to shell out as fees. Also you must understand exactly how much interest is charged on late payments. Make a note of these figures and compare the details on each card, in that way you will choose the right credit card for yourself.
4. Paying only the minimum amount
Some credit card holders only pay the minimum amount due. This is one of the most common credit card mistakes that lead consumers into debt and a reduced credit score. It is suggested to live within your means and always pay the full amount due.
5. Leaving your card unattended
Ensure that your credit card is always with you or it is under your scruitny all the time. For example, do not leave it unattended in a restaurant or hand it over to the staff before swiping. When making an online credit card payment, ensure that you do not leave your credit card details on the screen. Someone who uses your laptop or takes a peek at it can have your credit card details. So, don't fall into the trap of credit card fraud.
6. Taking cash advances without planning
Some credit cards allow you to take cash advances. However, the interest is usually high. Thus you must take this option only when there is absolutely no other choice during an emergency. Make sure you are aware of the interest being charged, as well as any other hidden charges.
Customers nowadays can avail of a variety of credit cards based on their needs and lifestyle habits. A customer can choose from cards that offer travel benefits, dining out perks, movie deals, shopping discounts and fuel perks. You can also build your credit score and access credit options in the future. If you keep on practicing positive credit card consumer habits, you can keep enhancing your credit card score. All the best to you!