Simple mistakes can prove financially costly for many everyday consumers. This could be a result of mere confusion or carelessness. Credit cards have become somewhat a dependable payment method source for most people as it involves plastic opposed to cash and provides the ability to spend now and pay later. This all seems convenient initially, however there are some risks to owning a credit card that people must be aware of prior to applying. Before you apply for a credit card, you should be highly aware of the risks involved and what mistakes to avoid.
Spending More than you Actually Earn
It is far too easy to continually spend money on your credit card. The scheme behind credit cards is to spend now and pay later, generally through a delivered monthly bill. Here is when you realise how much you have actually spent, and to some people’s surprise, can be a significant amount. Be careful with how much you spend and be sure to monitor your purchase activity to avoid over-spending.
Maxing Out your Credit Card
Over charging your credit card balance by more than your monthly limit can result in a fee, extra interest and potentially harm your credit history. This also relates to spending more than you earn. When taking out a credit account, make sure you put a reasonable cap on it that you can stick to and avoid this problem.
Paying Your Bills Late
Spending more than you earn or maxing out your credit cards may lead to you struggling to pay your bills, or not be able to pay your monthly bills at all. This will result in excess fees and higher interest rates than you would have originally encountered. Not to mention yet again damaging your credit score.
Taking out More Credit Cards
One of the pivotal mistakes made is taking out excess credit cards when you max one out or can’t pay another bill. Banks want to make money off people, therefore they will in most cases, grant people more credit. This will only build your debt and your level of spending that you can’t actually afford.
Losing Your Credit Card
Carrying a credit card entails the risk of losing it. You could easily drop or misplace your credit card and if found by the wrong hands, could possibly develop a huge bill at your expense. It is somewhat difficult to spend a stolen or lost credit card in retailers today, however it is easy to make purchases online. If you do lose it, cancel it immediately.
Lending or Giving Out Your Credit Details
You don’t want to lend anyone or even give out your credit card details. Once those digits leave your personal security, you won’t know where they end up. They could potentially be lost in transit or used on an unsecured website where your numbers leak.
Not Consolidating Your Credit Debts
If you ever get the chance, consolidate your credit cards and other personal loans. Fox Symes debt consolidation offers numerous loan types that will help you merge all your existing loan accounts into one simply monthly repayment. This will allow you to make your monthly repayments much more conveniently.
There are many risks to handling credit cards. Be sure to do your research prior to taking out one or any excess credit cards to help with your finances.