ALL >> Investing---Finance >> View Article
The Seven Deadly Sins Of Credit Card Use
No matter how convenient credit cards are - and they're almost obligatory for modern life - there's no denying that they can land the unwary card-holder in a whole world of trouble if not used carefully. Here we present the seven deadly sins of credit card use.
Late Payments
The number one rule of using credit cards is to pay your statement on time. Not only do late payments cause damage to your credit rating, they also cost you money - both in the form of the late payment fee, but also in the form of a hike in your interest rate for repeat offenders.
Minimum Payments
Even if you keep to a good repayment schedule and always pay on time, only paying the minimum amount required on your statement is a major mistake that most of us make - not least because we're actively encouraged to do just that by setting up automated payments such as direct debits. The problem is, with minimum payment levels set at only a few percent, nearly all of what you pay is swallowed up in interest charges leaving your debt virtually untouched. Sticking to the minimum amounts will all but ensure that you stay permanently in ...
... debt, and will cost you dearly in overall interest charges.
Cash Advances and Withdrawals
Most credit cards now offer the facility to withdraw cash from a huge number of ATMs worldwide. Don't do it, except in a real emergency when you really need cash and have no other way of getting it. Not only will you be charged a fee, the interest rate charged is usually much higher than your normal rate, and because more expensive debt is usually the last to be cleared, you'll be charged this high rate each and every month while you're carrying a balance.
Credit Card Convenience Checks
These are a bad idea as they suffer from the same drawbacks as cash withdrawals - i.e. high interest rates. Even if your card is one of the few still to offer this 'facility', avoid it - there's little benefit in using a check, and plenty of cost!
Spending on Balance Transfer Cards
Balance transfer deals can save you a fortune in interest on your debt if you handle them correctly. The problem is, many people fail to get the full rewards by using the same card for balance transfers and purchases. Because of the way most cards allocate the payments you make, your purchase debt will never be lessened until the balance transfer is fully repaid, and so will attract interest without any of it being repaid. Use separate cards for spending and balance transfers.
Impulse Purchases
One of the major causes of problem credit card debt is the casual use of cards to fund impulse purchases. As you're not actually parting with any cash, using a card doesn't feel as expensive as ordinary purchases, when in fact it's much more expensive! Think carefully before you buy whether or not your purchase will seem as good an idea when your next statement drops on to your doormat.
Paying for Essentials
While using your card as much as possible s a good idea if you're benefiting from a reward or cash back scheme, you should only do this if you pay off your balance in full every month. Using your card to pay for essentials such as food and energy bills, and letting your debt build up unchecked, is a sure sign that you're living beyond your means and need to have a hard look at your budget.
About the author: Michael writes for http://www.cardsense.co.uk and you can compare balance transfer credit cards at http://www.cardsense.co.uk/balance-transfer.html
Add Comment
Investing / Finance Articles
1. You Can Resolve Your Financial Emergency With Short Term Loans OnlineAuthor: jame sryder
2. How Kings Club Maximizes Your Retirement Investment In Australia
Author: Cameron Roberts
3. Please Provide Detailed Solution On How To Setup An Smsf In Perth?
Author: Daniel Stewart
4. Why Working With The Best Income Tax Consultant In India Is A Smart Decision?
Author: YATIKA
5. How To Find The Best Property Advisor And Get Better Rental Returns?
Author: Rick Lopez
6. How To Create A Passive Income Stream As An Expat?
Author: danielvettori
7. How Young Adults Can Achieve Their Goals Successfully With Financial Advisors In Perth?
Author: Daniel Stewart
8. Costs To Consider Before Buying Investment Property
Author: Rick Lopez
9. Common Mistakes In Futures Trading And How To Prevent Them
Author: Neha Jain
10. Maximize Retirement Income With These Diversified Australian Investments
Author: Rick Lopez
11. How To Get A Personal Loan In One Day?
Author: Brajendra Kumar
12. No Teletrack Payday Loans Guaranteed Approval: An Easy Solution For Urgent Financial Needs
Author: Kristopher
13. Sip Investments
Author: FundsIndia
14. Understanding Fiu Ind Registration: A Complete Guide
Author: seedling associates
15. Procedure For Registration Of Design In India: A Step-by-step Guide
Author: seedling associates