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31Oct

Some Potential Problems with Having a Credit Card

A credit card can be a wonderful device that offers rewards and can help you make purchases when you don’t have some spare cash. The problem with having a credit card is that it can bring you into debt faster than you may think and take you a long period of time to pay it back. Here are some quick tips that you should avoid and things you should do once you do decide you would like a credit card.

The first mistake that you could make is falling for the marketing of certain credit cards. Some people can easily be distracted with picking a credit card that contains a sport logo or features that don’t really match their spending habits. Make sure you do your research and pick a credit card that best suits your needs, especially with the interest rates. This leads to the next mistake which is not reading the fine print of the credit card that you decided to go with. How many times have you been handed a contract and not read it? Read through the fees, payments, interest, and everything in between. The more you know about your credit card, the more beneficial it will be for you.

Now that you have the credit card, make sure that you don’t just pay the minimum payment each month. You’ve probably heard that statement over and over again but you will realise that you should have listened when that interest just keeps piling up each month. Another interest killer is taking cash advances from your credit card, you often get charged a lot more than if you just used the card for purchases. And whatever you do, do not ignore statements or any other mail that your credit card company sends you.

Probably the worst thing you can do with your credit card is completely max it out, you will eventually just find yourself constantly paying enough on your credit card to make the interest payments, not even for use. Do your best to keep a balance and if you find yourself spending too much with your cards, get into the habit of leaving your card at home. The last tip is don’t use your credit card just for the points or the rewards. This is a common mistake among credit cards users, if you really saw how much you had to spend to earn the little amount of points, you wouldn’t be jumping into purchases with your credit card.

Once you have a credit card, it can be a great way to manage your money and budget if you use it correctly. To summarise, pick the right card for you, make your payments, and only use it when you absolutely have to. Good luck!

Disclaimer: The above information is general in nature and not intended to be advice. You should consider seeking professional advice before following any suggestions in this blog/website.