6 credit card blunders to avoid at all costs

Make sure you maximise perks and discounts every time you use your credit card.

These days a credit card for anyone 18 or older, is almost a “must-have”. When used wisely, a credit card can build a robust credit history to help you get that home loan you may need further down the road.

A credit card can help pay for expenses when you’re short on liquid funds. What many people don’t know is that efficient and knowledgeable credit card use doesn’t have to cost above and beyond your purchases.

Credit cards can even add value to your lifestyle. Here are some missteps to steer of to help you work your credit card(s) to the max.

1. Not using credit cards for perks and discounts

If you own a debit card, you know that the money you spend is withdrawn from your bank account immediately. If you don’t have that money, you can’t use the card.

But using a debit card also makes you susceptible to hackers and people who can crack all your bank information. If you don’t have a credit card, you may do yourself more harm than good in the long run.

Credit cards actually offer you benefits that a debit card does not, like certain perks and discounts. They are also good to use for transactions that have a higher risk factor, like online shopping.

2. Not paying your credit card bill

This is one of the biggest mistakes you can make because you will incur extra charges by missing just one payment. If you pay your bill just 30 days late, your credit score can be severely impacted.

And if, for some reason you pay your bill 60 days late, your interest rate will skyrocket, as will the penalty rates the credit card company charges you.

3. Making just the minimum payment

Making only the minimum payment due on your bill is a surefire way for the credit card company to assume that you cannot manage your finances.

They perceive that you perhaps don’t have the money to support the credit card that you have.

Such a situation could result in problems for both them and you. By paying just the minimum, you could also rack up much more expense in interest over time.

Try to pay even just RM10 more than the minimum to help get yourself out of the hole.

Exercise restraint. If you can’t clear your monthly bill in full, don’t make that extra charge.

4. Not checking your statement

How are you supposed to know exactly what is going on with your credit card account if you don’t examine what’s going on with it? That’s why you get regular statements.

Only by checking your statement each month can you find errors that the company might make, or even fraudulent transactions by third parties.

You may save yourself from difficulty getting refunds or fixing mistakes if you don’t wait too long but rather check it promptly and thoroughly.

5. Don’t charge more to your card than you can pay

Having a credit card is nice, but if you don’t think rationally about how you use it and just how realistically you can pay off that monthly bill, you can have a problem.

If you are charging more each month than you can actually pay for, you will eventually wind up with piles of debt and find yourself too far behind to catch up on those payments. Think wisely before using your card on larger purchases.

6. Paying medical bills with credit cards

One big mistake that many people unwittingly make is paying medical bills with a credit card. It’s not a great idea. Smaller charges like medications are okay, but significant procedures are definitely not.

Using a credit card can keep you from getting discounts on your medical costs or converting charge activity into any reward in the future. It is better to make other arrangements with the clinic or hospital where you had the procedure.

In a nutshell, holding a credit card is not a tough thing to do. You can easily get by making your monthly payments and using it as you always have.

But it is smart also to be aware of how to properly use it, and not fall into any bad habits. You certainly don’t want to find yourself with tonnes of debt because you made a stupid mistake.

Think about what will have the most positive impact on your financial future, and you will be able to make wise decisions about using your credit card. Being aware of potential missteps will actually help you be a smarter credit card user in the future.

This article first appeared in thenewsavvy.com

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