When you are
in a financial crunch, credit card offers landing in your mailbox might look
like an answer to a prayer. Don't succumb to temptation. The expertsâ€™ advice
can steer you away from the top 10 credit card mistakes.
shredder and you could make one of the most common credit card blunders by
collecting too many credit cards. Probably 95 percent of us don't need another
credit card to keep in the sock drawer or in the little metal box in the
Even if the
cards have zero balances, multiple open accounts could cause a lender to question
what could happen if the account holder gives in to temptation and maxes out
all that plastic.
Misunderstanding introductory rates
You may argue
that new card will help you manage your money better, because you can transfer
other balances to a no-interest account. Welcome to credit card mistake No. 2:
being misled by introductory rates. "People don't look at what the rate's
going to be once the teaser is over," says Daniel Wishnatsky, certified
financial planner and owner of Special Kids Financial in Phoenix.
reading the fine print
is reading the offer's fine print. Not doing so, is credit card blunder No. 3.
The tiny text insert is where you'll discover when the fun is over and itâ€™s
time to pay up.
a card for the wrong reasons
You might be
tempted to ignore the fine print because the card has other attractions, such
as a rebate or rewards program. Credit card granters are not a consumer's
friend, it is a business. They don't know what's right for you. Their job is to
extract as much money from you as they can. Your job is to not let that happen.
5. Not rate
the best possible interest rate. Not shopping around is credit card mistake No.
5. It's especially important to note the rate on unsolicited offers. If you're
struggling financially, you're not likely to get the most favorable rates or
terms. You'll be paying higher interest rates. So, do your comparison shopping
for a credit card.
OK, what if
you do need another card. Youâ€™ve read the fine print, you completely understand
the terms, and you got a competitive rate. But even after choosing the perfect
credit card, people still make mistakes, such as No. 6 on our list, making
minimum-only payments. If you only pay the minimum, you can add decades onto
your repayment of even low balances, increasing the chances of never getting
your bill late
payments, blunder No. 7, is better than not paying at all, but not by much. Not
only will you face a late-payment charge, which could be higher than your
minimum payment, your tardiness will show up on your credit report, damage your
FICO score and make it harder to get better terms for future loans and
accounts. Check your account statement for the due date and make sure you send
your check in ahead of time. But the date alone isn't enough. Some companies
have cutoff times. If your check arrives on the 22nd as required, but in the
afternoon mail, your payment is counted as late because your account terms
called for payment by 9 a.m. that day.
your monthly statement
You can avoid
late payments by checking your credit card statement. Not doing so is mistake
No. 8. Checking your statement will help you pay your bill promptly, as well as
allow you to make sure that the charges on it are correct. If you wait too long
to dispute a wrong charge, it becomes difficult to change. By waiting, youâ€™re
essentially accepting it.
Exceeding your credit limit
statements also can keep you from exceeding your credit limit, mistake No. 9.
This creates poor credit scores and is frowned upon in the credit scoring
model. It also creates excess charges and fees, and diminishes you chances for
better rates, or increase of your credit limits.
things you don't need
Careful statement examination could also
prevent the 10th credit card blunder, using plastic to purchase things you
don't need. Just carrying a credit card is statistically proven to increase
purchases by 30%. Go slow, and rethink every purchase. You will be paying more
for the item due to interest charges. Credit card charges should be carefully
considered and examined before running the card through the machine.