Credit cards are a very useful financial tool, but they can also be dangerous if not handled properly. Many people make mistakes when using them and end up getting into more debt than they can afford. In this article, we will show you the 12 most common mistakes when handling credit cards and how to avoid them so you can take full advantage of their benefits without getting into financial trouble.
Paying only the minimum
One of the biggest mistakes you can make when managing a credit card is paying only the minimum required each month. While it may seem tempting and convenient at the time, in the long run this can lead to significant debt due to the high interest that accrues.
It is important to try to pay the balance in full each month to avoid interest charges and maintain a good credit history. If it is not possible to pay the balance in full, try to pay as much as possible to reduce the amount of interest accrued.
Forgetting the payment date
One of the most common mistakes when handling credit cards is forgetting the payment date. If you don't pay on time, you will face interest charges and possible late fees. To avoid this, set an alert on your calendar or phone to remind you of your payment date. You can also set up an automatic payment to be made on the due date each month.
Not reviewing payment history
One of the most common mistakes when handling credit cards is not checking your payment history. It is important to be aware of the charges made and make sure everything is in order. If there are any unknown or incorrect charges, it is necessary to report them immediately to the issuing bank.
In addition, reviewing your payment history will also help you avoid additional interest charges and fees. You should always pay on time and in full to avoid late fees or additional interest charges.
Therefore, it is advisable to regularly review your payment history to keep your finances in order and avoid unpleasant surprises.
Using the card for unnecessary purchases
One of the biggest mistakes when handling a credit card is using it to buy things you don't need. It is easy to be tempted to buy something you like at the moment, but if you don't really need it, you will be accumulating unnecessary debt.
To avoid this, it is important to have a clear budget and spending plan. Before making a purchase with your credit card, ask yourself if you really need that item and if you can pay for it on your next statement without affecting your finances.
Remember that every time you use your credit card you are acquiring a debt that you will have to pay off at some point. Therefore, it is important to be aware and responsible when using it.
Not comparing interest rates and annual fees
One of the most common mistakes when dealing with credit cards is not comparing interest rates and annual fees. Many times, people focus on the credit limit and the rewards offered by the cards, but do not pay attention to the associated costs.
It is important to compare interest rates and annual fees between different cards to make sure you are getting the best deal. Always read the terms and conditions carefully before applying for a credit card.
It is also important to keep in mind that interest rates may increase if you miss the minimum payment or make a late payment. Make sure you understand the credit card company's policies to avoid additional fees.
Not reading the terms and conditions of the contract
One of the most common mistakes when dealing with credit cards is not reading the terms and conditions of the contract. Many people simply sign the contract without reading it carefully, which can lead to problems down the road.
It is important to understand interest rates, fees and any other relevant information before signing a credit card contract. If you don't understand something, ask questions before signing.
In addition, it is important to regularly review your credit card terms and conditions to make sure you are aware of any changes in rates or fees. Reading the contract can be boring, but it's an important part of responsible credit card management.
Failing to protect personal and financial information
One of the biggest mistakes made when handling a credit card is not adequately protecting personal and financial information. This includes not keeping statements in a safe place, not changing passwords regularly, and not verifying charges on the statement.
It is important to protect personal and financial information to prevent identity theft and credit card fraud. Some steps you can take include:
- Keep statements in a secure place and shred them properly when they are no longer needed.
- Change passwords regularly and use strong passwords.
- Do not share personal or financial information with strangers or on unsecured websites.
- Regularly check statement charges and report any suspicious or unauthorized charges.
Failure to report unauthorized charges in a timely manner
One of the most common mistakes when handling credit cards is not reviewing statements and not reporting unauthorized charges in a timely manner. If you notice any charges that you don't recognize, you should immediately report them to the card issuer so they can investigate and resolve the problem.
Failure to do so can result in additional charges and affect your credit history. Also, if you wait too long to report it, it may be more difficult to resolve the problem and get your money back.
To avoid this mistake, be sure to review your statements monthly and keep an eye out for any suspicious charges. If you find something you don't recognize, act quickly to protect your credit and your finances.
Losing control of your available credit limit
One of the most common mistakes when handling credit cards is losing track of your available credit limit. Many people use their credit cards without taking into account how much money they have available to spend and end up accumulating debts they can't pay.
To avoid this mistake, it is important to keep a record of the expenses made with the card and to be aware of the available credit limit. It is also advisable to establish a monthly budget and not spend more than you can pay at the end of the month.
Another way to avoid losing control of the available credit limit is to use mobile applications or online tools that allow you to monitor your expenses and establish alerts when you approach the credit limit.
Not having a plan to pay off accumulated debt
One of the most common mistakes when managing credit cards is not having a plan to pay off accumulated debt. Many people fall into the trap of spending more than they can afford and then find themselves in a difficult situation to pay off their debt.
To avoid this, it is important to have a clear and realistic plan for paying off accumulated debt. This can include making regular payments, reducing unnecessary expenses, and seeking additional forms of income.
It is also important to remember not to rely solely on the minimum monthly payment, as this will only prolong the time it will take to pay off the debt and increase accrued interest.
Having a solid plan for paying off accumulated debt is crucial to maintaining good financial health and avoiding falling into an even more difficult situation in the future.
Applying for too many credit cards at the same time
One of the most common mistakes when handling credit cards is applying for several at the same time. This can negatively affect your credit score, as each time you apply for a card, an inquiry is made on your credit history. If there are too many inquiries in a short period of time, it can appear that you are desperate for credit and be seen as a risk to lenders.
To avoid this mistake, it is advisable to apply for one card at a time and wait to be approved before applying for another. It is also important to do some research beforehand to find the best card option for your needs and credit score.
Closing a card without transferring the outstanding debt to another card
One of the most common mistakes when handling credit cards is closing a card without transferring the outstanding debt to another card. Closing a card with outstanding debt can negatively affect your credit score and can also result in interest charges and penalties.
If you want to close a credit card, be sure to transfer the outstanding debt to another card or pay it off in full before closing it. If you don't have another card to transfer the debt to, consider applying for a new card with a lower interest rate and transfer the debt to that new card before closing the old one.
Remember that closing a card does not mean the debt goes away. You will still have to pay off any outstanding balance, but without the benefits associated with the card, such as rewards or fraud protection.
