five most common credit card traps
01 October 2010
Credit cards are wonderful things - convenient, secure, and accepted almost everywhere.
There are several pitfalls and common credit card traps that all credit cardholders need to avoid. Here are some tips for staying out of trouble with your credit card:
1. Your credit card is NOT cash
Once you start treating it the same way as cash, or even worse, thinking it is free money, you are likely to find yourself at the upper limit of the credit card and in serious financial trouble. You are being charged interest every time you miss a repayment or have an outstanding balance. Avoid taking cash out on your card - the interest rates are much higher than the rate for purchases.
2. Don't buy on impulse
Tempting as it might be to have the latest gadget or fashion accessory, if you can't afford it don't buy it. And whatever you do, don't buy something because you need to accumulate points.
3. Always pay your minimum amount due ON TIME
Better still, pay the outstanding balance in full and on time. Late payment fees add up. And if you miss several payments you risk a poor credit rating.
4. Watch your limit
When you take up a credit card set the limit to one you can manage. Be realistic about your ability to pay the balance and minimum amounts back each month and remember not to exceed it. This could identify you as a credit risk, affect your credit rating or count against you when or if you want to apply for a credit limit increase.
5. Ask for help if you need it
If you get into trouble with your credit card spending never leave it until the situation is completely out of control. There are options to help pay the card off or reduce the debt - including credit card balance transfers to reduce the amount of interest you are paying, personal loans or direct debit to get your payments under control. Look at switching to a low interest rate credit card or a card with no fees. Always remember that our customer service staffs are there to help.