Common Credit Card Mistakes

The following article highlights some common mistakes made by credit card holders before, after and during getting a credit card issued. Before getting the card: Procuring multiple cards An extremely common mistake made by most inexperienced cardholders, lured by the attractive initial rates of an add-on card or a special discount scheme offered during peak season, they often find themselves in twice as much debt as before.
Not shopping around for the best interest rate
Credit card rates and terms vary greatly. Always ask your issuing bank for all the credit card rates they charge like fuel surcharge, late fees, revolving credit charge etc. The bank’s website or customer care service can be used for this function. Choosing a card for the wrong reasons
Cardholders often get a card issued because of the fringe benefits and reward schemes on offer, even though the rates are higher. A credit card is there to make purchases, not to earn reward points. They should be treated as a bonus, after getting a card with the best rates.
Being misled by introductory rates
Some credit cards, especially of the low-end variety, often have a low or waived initial fee and a modest annual fee for the initial period. However, after the period is over, the rates spiral and increase significantly. The paperwork and forms must be scrutinized carefully by the cardholder for such tricks.
Not reading the SMALL print
Before you sign up, be sure you know the card's interest rate and how it is calculated, the grace period, fee schedule, and other terms. After getting a card issued, pay attention to any updates or notifications sent to you by the bank or the card company.
After getting the card:

Applying for a card and limit you cannot afford to repay and paying the minimum repayment

The most publicized feature of the credit card is that of the minimum amount due. What is not advertised is that interest is charged on the amount spent, not the amount outstanding. So use this feature only as a last resort.

Maxing out the card
This implies that the holder has overspent, and the debt becomes crippling. Often the cardholder is stuck paying off the interest alone, and cannot make any inroads into the principal.
Using the cash advance function

Check on the terms and conditions of the cash advance function very carefully. The interest rates are often steep and there is no interest-free period. If you must use it, repay the money at the earliest.

Late payments
Late payments subject you to extortionate interest rates and set fees. The charge is extremely high and proportional to your bill. The late payments are one of the main revenue-earners of the companies.
Not checking your statement and not keeping your receipts

A common error when we start to feel the pressure of a debt burden is to start to ignore the fact that the debt exists in the first place. A downward trend starts that will leave you hopelessly in debt. Also keep your receipts from purchases to cross-check with your monthly bill.

Adding a secondary user

Although some may not consider this a mistake, if you add a secondary user to your credit card account you’ve suddenly lost control over the spending on your card. The interest rates and payments you will have to make will also increase, and the fraud risk multiplies.

Using your card overseas

Overseas purchases are charged with a large fee and a higher exchange rate than the current one. It’s much safer and cheaper to carry travellers’ cheques or cash. There are also special deals which certain global banks offer, one among them being the offer to convert your card to the foreign country’s currency, provided the bank does business there.
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