5 frequent errors when using a credit card and how to avoid them

The credit card provides quick access to payment, freedom in shopping and can help manage expenses when used carefully. Many people resort to both small daily purchases and for holidays or online shopping. However, improper credit cards can generate additional costs, financial stress and long -term effects on credit score.

Those who learn the basic rules can transform the credit card into a useful personal budget tool. Subsequently, you will find five of the most common mistakes, with clear examples and practical solutions, to help you use the responsible card and minimize risks.

1. Ignore the fact that the money on paper is not yours

An ordinary error is displayed when people deal with the amount available on the credit card as an additional income, not as a loan they must return. You can easily see this behavior in impulsive purchases, for example, when you find an interesting discount and use paper without thinking about total term cost.

Often, the amount used seems to be «invisible», which brings at the expense of real possibilities. It establishes a clear monthly budget for paper costs. Use mobile monitoring mobile applications or even a paper written table.

2. Use your credit card to cover the usual expenses

The credit card should not take on a salary place, nor to cover the month of invoices or other financial commitments. Many customers can use almost the entire limit for the payment of public services, food purchases or rates. This practice can generate dependence on credit and a gradual increase in debt.

For example, if you buy the monthly energy invoice, the TV subscription and the shopping necessary for the home using the credit card and refund only a part of the amount, in 5-6 months you can reach a hard balance. In addition, total costs increase due to interest and commissions. Use rescue strategies to organize your intelligent budget, so that the card is reserved for truly urgent situations (unexpected repairs, medical events, temporary income and so on).

3. Buy only the minimum amount requested by the Bank

Many owners of cards choose to reimburse only the minimum amount required monthly by the bank, considering that this is the reason why debt get rid of. In reality, this decision has postponed the payment of the debt and increases costs.

For example, if you have a balance of 2,500 she and the bank requires 3% of the amount (i.e. 75 she) per month, reimburse the interests and very little of the debt. After a year, it is possible to reimburse the initial and double amount or even more in the interest, extending the refund period.

To reduce additional costs:

• Pay any time you have the possibility of the entire amount used in the previous month;
• Establishes a greater monthly amount for the refund, not to limit the minimum required;
• Use the computer on the bank’s website to estimate total refund costs.

Do you use more financial instruments? Study in detail the differences between the debit and credit card, to make the best financial decisions.

4. Delaying the payment of the rate or invoices relating to paper

There are frequent situations in which users forget to pay cards invoices in time. Such delay attracts sanctions, greater interest and can affect credit history. If the bank reports the delay to the credit office, this reduces the score: the subsequent loan applications will have less advantageous conditions.

If you have the tenth of each month and forget to pay, in addition to penalties, the bank can temporarily block the card. Most banks offer the automatic payment option or send notifications before the deadline.

Take these measures to avoid delays:

• Activate the notifications of SMS OE -mail from the bank;
• Set memories on the phone for the expiry date;
• Discuss in advance with the bank if the payment problems are anticipated and request postponement or resignation.

These simple actions can help maintain a stable financial profile and avoid further complications.

5. Make cash withdrawals from the credit card

The collection of cash from the ATM using a credit card involves additional costs compared to any other paper operation. The interest is applied immediately, without a period of grace, and the commissions generally reach the few percent of the amount withdrawn.

If you took 1,200 she for a car repair and do not refund the amount quickly, at the end of two months you pay not only the amount withdrawn, but also at least 100-150 she only from interest and commissions. For greater quantities, the loss increases.

• Use the credit card for payments for traders, not for cash;
• If you need cash, call the debit card or transfer the services between the accounts;
• In unexpected situations, compare the offers of different banks and analyze exchange rates if you use paper abroad;
• Consult this guide on paying the card abroad to avoid unnecessary costs.

Avoid collecting money frequently. Use this option only if you have an urgent situation and you have no other fast options.

Additional suggestions for credit cards management

Use the credit card as a security tool, not as a source of permanent money. Discover the offers of banks and choose the product suitable for your needs. If you want to improve your money management skills, follow the articles dedicated to financial education. And for complex decisions, he appeals to an authorized financial specialist or consultant. Periodically check the updated exchange rate and analyze all the costs associated with your card. Adopt informed and prudent behavior in financial management!