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#finance Blogchatter A2Z 2021

Common Credit Cards mistakes we make

Mistakes we make with our credit card unknowingly can put us in a grave debt. It would cost you a lot of extra money and also impact your credit score. 

Credit Card (CC) can really be helpful but how you use it and when to stop it is very crucial. Overspending on the credit card and faultering with your payments could invite a hefty late fee and interest rate charge. But it’s not tough to use your card wisely and gain something out of it rather than losing it. 

Know your card: When we get or subscribe to a new card, we generally ignore the terms and condition which are finely written. But it’s important to understand the jargons and terms written. Keep your eye on the following terms;

      Annual Fee: Annual charge for the CC.

      Interest Rate: The rate which will be charged if you carry your balance to next month. 

      Late Fee: Amount charged if you miss paying on due date.

      Foreign Transactions: When you use the card internationally, it calls for a % charge. 

Not checking the CC bill: It’s important to check your CC bill in detail every time it comes and not just shove it in the drawer. This way you could spot an error if any or a transition which could have appeared twice. These errors when spotted early and raised, could help you in timely dealing with your card company. You need to be proactive about reviewing and getting the errors rectified. 

Making minimum Payment: While credit card companies give you the option to pay the minimum amount of your bill, it’s not a wise thing to do as a user. Over the period of time, this amount keeps mounting for the interest you pay on it.  The best thing to do here is, use your card only when you know you will be able to pay for it. 

Missing payments: When you miss paying your CC bill on time, you are going to get charged a late fee plus your credit score gets impacted. The next month you will have a higher CC bill which could shake up your entire budget. In order to not miss any of your payments, set up a reminder in your calendar and email notifications or set up an auto pay option with your bank. 

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Lending your CC to someone else: When you handover your card to someone else, you are giving them the power to swipe as much as they want with no control from your end but you will be solely liable to pay the amount and not the other person. If he/she refuses or delays in pay the amount, you will have with a liability which you didn’t incur but have to pay for. 

Applying for too many cards: When one applies for too many CC’s, it ticks your credit score negatively. In such scenarios, rejection and denials become more as the banks gets suspicious about these sudden applications. So, stick to just one card and get another one when needed. 

Using card for everyday needs: CC are best when used for expensive things but when you use your card for even small expenses, you are abusing the card and simply transferring each and every expense of the month to your next month. Also, if you by any means fail to pay your bill on time, a pack of milk which cost you INR 100 would now cost you INR 150 with late fees included. 

Going after the Reward Points: A bank will not give you reward points which would be above their interest rate. So, when you are chasing the reward points, you may be increasing your spending on the card to an extend that you may fail paying it on time. So, if you are after the 5000 points to get a discount on electronics shopping of INR 1,000/-, keeping the mind the interest rate, this would not be a wise thing to do. Remember, more the reward beneifts, higher are other charges and interest rates. 

Having and using multiple cards at a time: When we use many cards simultaneously, chances are we may forget or miscalculate the amount spend on a particular card and land up overspending on it. Again, with many cards in hand, you have to remember their due dates and payments as you would not want to faulter in them. 

Credit cards are beneficial when used wisely and after accessing your expenses and payment ability. But the reverse is true when you blindly get attracted to reward points and ease of payment. So, stick to your financial plan and budget and don’t go swimming against the tide. 

In my next blog I will talk about things you should know about your credit card. Stay tune. 

Till next time

Be wise and don’t let in and unwanted surprise. 

This blog is a part of Blogchatter’s #blogchatterA2Z challenge. 

20 replies on “Common Credit Cards mistakes we make”

I thought it would be a good idea to have one for emergencies but it just doesn’t seem to be worth all this hassle. The unfortunate part is that for some online subscriptions credit cards are necessary which is so annoying

Have had some bad experiences with credit cards in the past and now I’m just wary of them. Swiping is so easy but we have to know the cons that come with them too.

Having too many cards reminded me of the scene from Confessions of a Shopaholic when she divides the cost of a scarf between 3-4 cards so she can buy it. God this can go out of control so quickly!

The mistakes you are pointed out are so common but surprisingly many credit card users make them. Credit cards are convenient but one must be careful. Having to many cards is one thing that goes out of hand sometimes.

late fees, interest fee.. once you miss the payment it is like a never ending thing.. your post is a great reminder how credit card should be used for wise or effective shopping needs but not daily. I know some people who live on the credit cycle.

Yet another incredible post buddy and you have rightly pointed out the numerous fees involved that is why I steer clear of them mostly. But if we know about them we can plan better.

These are some of the common mistakes that people make. Especially applying for several cards and also going after reward points.

These are some of the common mistakes that we make. Especially applying for different cards and going after rewards.

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