Having a credit card and using it the right way is a tricky road to travel. Not many are able to do it perfectly. So, as a result, many of them end up in huge debts that they can’t repay or debt cycles that seem to go on and on.
Credit cards come with their own set of advantages and disadvantages. On one hand, they are a wonderful convenience that can allow you to spend without wondering how much cash you have in your packet. But, on the other hand, using a credit card is like moving in a minefield full of things you should never do.
But you’re not a financial expert. You can’t expect to keep track of all the finer details of using a credit card. That’s understandable. But what you can do, however, is to avoid some of the glaring mistakes that lead people into a debt trap. Here are some of those mistakes that you need to religiously avoid while using credit cards.
Don’t get too many credit cards
Just because you can, doesn’t mean you should. And one of the things you should never ever do is to get more credit cards than you would realistically need. By piling up cards, you’re simply increasing the chances of finding yourself in deeper debt. How so? The annual fees of all the cards add up to be a financial burden. Apart from that, having a lot of cards can also have a negative impact on your credit score. Surely you wouldn’t want that.
Don’t avoid getting credit cards altogether
If you are on the other end of the spectrum and you think not having even a single credit card is a good idea, then think again. Sure, not having a card will save you all the additional expenses. But what it would also do is to reduce your chances of being able to secure a mortgage or any other loan down the road. Having a credit card is your single opportunity of building up a credit history. Instead of blowing it altogether, learn to use the credit card responsibly.
Don’t ignore the terms and conditions
The first step to using credit card responsibly is paying attention to all the terms and conditions that come with using the card. Make it a general rule to read every bit of the document before you sign it. Whenever availing a particular offer, don’t forget to read the fine print. Don’t worry if you can’t make sense of the financial lingo. You can always ask the bank’s representative to explain the terms to you. Reading the terms is an effective way of knowing about any hidden fees that you may have missed.
Don’t shop excessively
This is one of the most obvious pieces of advice anyone can give you. Yet it’s also one of the biggest reasons people end up deeper in debt through credit cards. Using a credit card properly is all about self-restraint. You have to realise that owning a card does not give you a free pass. Don’t buy on impulse. A helpful tip is to wait 48 hours after you’ve made a decision to buy the product.