Credit Card Debts: Tips to Avoiding the Common Pitfalls
Posted at by CreditWiz on category CreditHow can you avoid getting into trouble with bad debts on your credit card? You could start by avoiding the following mistakes borrowers commit:
1. Not Reading the Small Print:
Cred card providers might tell you that the reason Terms & Conditions are printed in small text is that they do not like to bore you with the many details. But that is actually where they conceal the true cost of whatever you are signing up for.
As the client, it’s your responsibility to check everything and see to it that there are no any traps that you could easily trigger. If the text printed the form is too small to read, call your credit card issuer.
2. Misconception on Introductory Offers:
It’s easy to give in to a very inviting headline. The people who write such headlines are paid to make them as alluring to people as possible. Usually, when people pay too much attention to the benefits of a credit card, they just ignore the details, where the drawbacks are usually hidden.
For example, if credit card offer states six months interest free balance transfer, look out for interest rate and transfer fee after the interest free period ends. Also often included in the small text are conditions like, if you miss a payment, whatever is left on the offer will be withdrawn.
3. Making Only the Minimum Payment:
Servicing the debt with ease is one of the advantages of using a credit card — you just have to pay the minimum percentage of your balance for every month ( 2.5per cent).
Paying just the required minimum could actually cost you more. This is because the interest is calculated by the day. For each day that you have a balance, you are paying interest on every penny.
4. Owning Many Credit Cards:
People often believe that having multiple credit cards could help one’s credit rating. This might be true based on the balance you maintain on your card.
The disadvantage is that it will make it tougher to obtain new credit. Lenders will wonder whether you already have too much debt and may not be capable of making repayments. Another negative aspect is that it increases the chances of getting deeper into debt.
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