Many people hesitate to use credit cards because they fear ending up in debt. This can happen, but most of the time, credit cards can be hugely beneficial, as long as you understand and follow some cardinal rules, while avoiding making crucial mistakes.
Here is the list of 5 credit card mistakes almost everyone makes
Mistake #1: Not analysing your credit report
Personal credit reports are like report cards to banks. It is your responsibility to check the accuracy of your report. Check your report regularly for any unexpected debts or false debts in your report. Inaccuracy of your report may reflect badly on you as a debtor (and wrongly so!). Click here to find out more about obtaining your credit report from the credit bureau.
Mistake # 2: Neglecting to track your credit card expenses
So you have a new credit card. First stop: spend spend spend! But wait…forgetting what you have spent on may turn out to be a very big mistake. Close tracking of each expense is needed if you want to avoid interest charges and accumulating debt. So, keep track of your every transaction and make sure they are within your means.
Mistake # 3: Overlooking the balance transfer cutoff dates
It is possible to transfer your credit card balance over to your new card in return for lower interest charges (for a limited time). The favourable interest rates are only offered for a limited time, after which interest and other charges may revert to higher rates. Be aware of your cutoff date and clear off all outstanding balances before then.
Mistake # 4: Not reconciling your credit card records
If you are neglecting your credit card expenses (mistake #2), it is likely that you are not properly reconciling your credit card records either. Reconciliation of credit card records can help you to detect errant charges, fraudulent transactions and protect you from paying more than you rightfully should.
Mistake #5: Failing to monitor and update automatic payment methods
It is easy to set up a credit card to make automated payments for bills. But, what happens when your credit card expires, or is cancelled? If care is not taken, many bills could be left unpaid, which can affect your credit reputation or result in interrupted services. Be sure to monitor and update your automatic payment methods to use only active credit cards.
Want the best financial deals in town delivered to your inbox once a month? Sign up for iMoney’s Monthly Round-Up today!