We all love to have credit cards. However, many of us end up taking a credit card for all the wrong reasons or end up using it indiscriminately only to end up in a financial mess and spoil our credibility.
1. Choosing a card from wrong reasons: Consumers need to evaluate their reasons for credit while opting for a credit card. Credit card companies are out there for doing business. Their objective is to extract as much money as possible from the customer's pocket. Here, the terms and conditions on every card would be drawn in such a way that they are beneficial to the company. It is important to select a card that matches your objectives and reasons.
2. Not shopping for the right card: This is the largest mistake made by every credit card customer. They do not like to shop around and inquire about the interest rates different companies are offering. Even a 1 percent decrease in the interest rate can be a significant amount.
3. Exceeding credit limit: Exceeding the credit limit on the credit card can have a bad reflection on the credit report. Lenders never encourage customers who tend to spend the entire available credit limit. Apart from that, it is really hard to repay the credit amount at a higher interest rate.
4. Ignoring monthly statement: Monthly statements are an apt representation of all the expenses made using a credit card. Careful checking of a monthly statement helps in avoiding many hassles including late payment and exceeding credit limits. Apart from these, checking the monthly statement is even more important so as to verify the charges levied by the card issuing company. One can also avoid different types of credit card frauds that occur when the identity of the cardholder is stolen and used for fraudulent causes. Any errors or mistakes in the credit card statement should be immediately reported to the concerned authorities.
5. Buying things that are not required: With the availability of free money, many people have the tendency to buy things that are absolutely unnecessary and are not required by any means for day-to-day life. Credit cards are not meant for making unnecessary purchases. They should be used as a last resort in case of any financial emergency. A careful examination of the monthly credit card statement needs to be done religiously so as to avoid any unnecessary purchases.