The Top Ten Worst Credit Card Mistakes Part 1

Post by Sharat on May 22, 2009 · Under Featured Articles, Hints and Tips, Personal Finance, Self Help, banking, credit cards, interest rates, loans, personal loans · Comment 

When individuals face financial problems it is not surprising that credit card offers suddenly start to look very appealing. Here are the first 5 of 10 commonly made credit card mistakes.

1. Having Too Many Credit Cards

The most obvious mistake that consumers make is having to many credit cards. If consumers were to ask themselves whether a new credit card was needed, 95 per cent of the answers would be no. Having to many credit cards is a temptation that consumers don’t need, a lot of times consumers end up carrying more debt than they can afford largely because they don’t know when to stop spending on credit. Therefore having to many credit card is never a good thing.
Even having cards which carry zero balance is not good. Multiple open accounts could cause lenders to question whether the account holder is in danger of over extending themselves.

2. Misunderstanding introductory rates

The most common mistake borrowers can make is obtaining a balance transfer card under the assumption that transferring interest bearing debt from existing cards on to a zero interest rate balance transfer cards is good money management. It is good management so long as the borrower is acutely aware of when the introductory offer of zero interest rates cease.

A lot of borrowers are simply unaware when the teaser rate is no longer valid, and assume that when they get beyond the offer the interest rate will be reasonable or no different to other cards. That is not always true, and borrowers should always strive to be aware of how long the offer they take advantage of is valid for and what the interest rate on the debt carried beyond the introductory rate is.

3. Not Reading The Fine Print

Borrowers failing to read the fine print when getting into debt on a credit card is mistake number 3 and something that is easily avoidable.

Buried in the fine print is how long introductory interest rates validity is buried, the fine print also contains information and charges relating to balance transfers and specify offer limitations.

4. Choosing A Card For The Wrong Reasons

Many consumers opt for cards based on non material attractions such as rebates or rewards programs. These type of bells and whistles often cause consumers to ignore the fine print and not bother with learning what their fees and interest charges are or how long their introductory rates are valid. This type of behaviour is choosing credit cards for all the wrong reasons

5. Failing to Shop For Rates

Consumers are often too lazy to shop around for the card with the best interest rate, and this is mistake number 5
It’s especially important to note the rate on unsolicited offers. When borrowers struggle financially, they are not likely to be able to get the most favorable rates or terms. So borrowers and consumers should comparison shop for a credit card.

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