Common Credit Card Mistakes

Overview of Credit Card Mistakes

There are a number of common credit card mistakes, and unfortunately some people have to learn the hard way about what they are. Read this list carefully, and consider if you're one of the habitual credit card rule breakers. If you are, chances are good that you have found yourself, at some point in your life, under a seemingly insurmountable amount of debt thanks to credit card bills that have built up. While there are always extenuating circumstances, if you commonly find yourself making these mistakes, it may take a renewed focus on your part to maintain your financial security. Having said that, let's move on to the biggest pitfalls of owning a credit card.

The Biggest Credit Card Risk

Probably the biggest mistake we see is the carried over balance, also known as making the minimum payment. When you get your bill each month, the credit card company is only too happy to see you not pay the full balance due. In fact, they encourage it with such statements as 'minimum balance due', which originally is a nice and small fraction of the overall bill. At first it sounds like a great deal. But hidden somewhere in your bill, probably on the back of the form in very small type, you'll learn the dirty, dark secret. That leftover balance, the one that you're going to carry over to next month, is going to get bigger. Thanks to big interest rate charges, ten, fifteen, even twenty percent, you'll open up next month's bill and it'll be as if you never paid last month. The biggest threat to your money is not paying the full balance of your credit card. The bank might not like it (after all, they don't get any extra money from you), but you've just taken a huge step for both yourself and any family members or dependents that you have.

Other Common Credit Mistakes

There are a number of other credit card mistakes to avoid as well. For starters, don't open up new accounts when you can't pay off the ones you have currently. If you have a hard time keeping up with the bills and doing the math, more cards will only confuse you. However, there are times when it makes sense to open a new account, if you can transfer the balance of an old card and get a lower interest rate. If this is the case, make sure to close your old credit card after the balance gets moved over. Make sure you don't get charged an annual or monthly service charge from either of the credit card companies, and that goes for the new accounts you open as well.

Another mistake many people make is to throw away their bills, or even worse, never read them in the first place. Make sure you keep a close eye on your statements and payments. If you work out a payment plan, get it in writing and keep all your financial information organized. You'd be surprised how often bills are in error, and end up charging you double or triple what they should. By maintaining good records, you'll have evidence to support your side when the debt and collections agencies ultimately come knocking. There have been many cases won and dollars saved by keeping good records.