Whether you have a single credit card or a wallet full of them, how you use your cards could make a world of difference. When used properly, credit cards give you freedom and flexibility over your finances, but when misused these pieces of plastic can quickly turn on you.
Credit cards have been around for many decades, so it is all the more surprising that so many cardholders keep making the same old mistakes. Here are five common credit card blunders – and what you can do to avoid them.
Shopping Sprees to Get Extra Rewards
Having a credit card can be very rewarding, with free airline miles, valuable points and gift cards just for doing what you already do and spending what you would normally spend. Unfortunately, some cardholders use these goodies as an excuse to overspend, and that could be the most costly mistake of all.
If you charge too much on your card, you could rack up all kinds of rewards, but the interest charges and late fees will add up much more quickly. Spending more than you can pay off at the end of each month could cost you more than you realize, so keep the card in your wallet until you know you can control your impulses.
Allowing Online Merchants to “Store” Your Account Information
Shopping online is convenient – you just sign on to your favorite website, fill your virtual cart with what you need and check out using your credit card. But allowing those online merchants to store your credit card information could be very risky.
If your favorite online store suffers a data breach, your credit card number could be loosed on the world, and once it is out there, ongoing the damage could be next to impossible. So do yourself a favor and enter the credit card number every time you shop – this simple step will greatly reduce the risk of online shopping.
Not Knowing Your Credit Card Statement Closing Date
Whether you just signed up for a new credit card or have had the same card for years, it is important to know your closing date. Knowing when your billing cycle ends can make budgeting easier, so you can pay off the bill in full when it arrives.
Knowing your closing date can also help you if the bill is late or gets lost in the mail. Since you know when your billing cycle ends, you can notify the issuer if the statement has not arrived in a reasonable amount of time. That can allow you to pay what you owe without incurring late fees, interest charges or other unnecessary expenses.
Failing to Review Your Statements
Even in this age of security breaches and identity theft, a surprising percentage of cardholders never check their monthly statements. If you are one of them, you are making a serious mistake, one that could have long-lasting (and expensive) consequences.
If there is fraudulent activity on your account, you only have a limited amount of time to report it. If you fail to do so, you could be on the hook for charges you did not make. Avoiding this common mistake is all too easy – just check your list of charges against what you have spent in the past month and report any discrepancies to the card issuer right away.
Tossing Updates to Your Credit Card Agreement
When card issuers make a change to their customer agreements, they are required to notify the impacted cardholders. Too often, however, those notifications end up in the trash.
While these notifications and updates can seem pretty meaningless, it is still important to read them carefully. The update could be nothing more than a change to the small print, but it could also be notification of a new annual fee or higher interest rate. You ignore these notices at your peril, so open the mail and read it carefully.
Having a credit card can be convenient, but it is easy to misuse these innocent pieces of plastic. If you want to enjoy the benefits of a credit card account without the risks, identifying potential blunders and avoiding them is a good place to start.
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