Listed below are five worst mistakes most credit card holder make. If you can avoid these mistakes, you will benefit a lot.
1. Too many credit cards:
In most cases, a single credit card is sufficient to meet all the credit needs in a person's life.
More than one card leads to greater temptation resulting in inviting greater credit risk over a long run.
Multiple credit cards or credit accounts leave the lender with a question that the account holder must be spending all the money on the card.
2. Misunderstanding introductory rates:
Introductory rates on them are often low.
Many people get enticed by these rates. However, they give least attention to the rates that are levied once the introductory period is over, which can be as high as 20 percent.
3. Not reading the fine print:
This is the most common credit card mistake committed by a majority of people.
This is one strategy that companies apply to escape from legal entangles and also attract customers.
Most of the terms and conditions, including the interest rates, at the end of the introductory period are written in a fine print at the bottom or at the end of the brochure.
It is important to read these conditions in order to have a better understanding about the benefits offered by a particular card.
4. Making minimum payments:
This is another common mistake committed by consumers.
Credit cards should be used only during emergencies.
People should understand that credit cards offer money on credit but are not a form of income.
It is important to pay off the credit at the end of every month. With minimum payments, the trouble is going to increase further.
This is because the interest rates on the balance amount will be higher making it difficult to pay off loans for a long time.
5. Paying bills late:
When one wants to pay the credit card bill, it is better to pay that well ahead of time.
Most of the companies charge late-payment fees.
Apart from this, late payment of bills gets reflected in the credit reports, thereby making it difficult to obtain loans at better terms when one goes for any loans in the future.