Credit cards can be hugely useful, allowing you to make large purchases more affordable by spreading out the cost. You can even get cash back and rewards with some credit cards, making them a great option for people wanting to get the most for their money.
If you want to enjoy all the benefits credit cards can offer and get the most from this way of spending, you need to know how to use your credit card properly. Even more importantly, you need to know what to avoid. The following are the six things you should never do when you have a credit card:
1. Miss a payment. Not only do you have to pay interest on credit card spending when you miss a payment, but you are also likely to incur penalties and charges. These, added on top of interest payments, can make your credit card suddenly very expensive.
2. Consistently only make minimum monthly repayments. Every month, you will be given the option to pay your balance off in full or to just make a small minimum monthly repayment. If you take the latter option, the rest of the balance will accrue interest which is added to your overall debt. This too can make your credit card more expensive.
3. Use your credit card to withdraw cash. When you use your credit card to withdraw cash from an ATM, you are given what is called a cash advance. The interest on cash advances is often sky-high, and you may also have service charges to pay.
4. Give out credit card details over email or text message. Few companies will ask for your credit card details via email or text message. To prevent credit card fraud, only ever give credit card details on authorized websites.
5. Lend your card to someone else. It might seem like the nice thing to do to lend your credit card to a friend or family member in need, but this is also one of the easiest ways for your credit card to get lost or stolen.
6. Forget to read the terms and conditions. When you make a credit card application, there are always terms and conditions to read. These relate to fees, charges, interest rates and other things you might need to know, so take the time to read them.
What other things did I forget?