Monday, November 8, 2010

5 Common Mistakes the Credit Cardholders Make

If you have overwhelming debts then it is advisable to take serious action against it. You might face a similar economic turmoil like millions of other credit card consumers. In order to manage your debts you need to control your expenses. If you realize your mistakes then that would help you to put an end to the accumulating debts.

Top 5 credit card mistakes:

1) Making minimum payment:

You may committee a severe mistake if you plan to pay off a minimum balance. If you only make payment of the minimum balance in this way you won’t eliminate your actual debt. Your interest rate would increase on the outstanding amount making the repayment plan unaffordable for you. As you are unable to pay off your debts therefore your situation would be unfavorable.

2) Late Payment:Making late payments can have more adverse effect than not making any payments at all. On making late payments a fine would be levied on you that would be more than the minimum balance. Your credit report as well as your FICO score would be negatively affected on defaulting. As all the lenders would refer to your credit report so tainting it with negative remarks can create impediment while applying for other loan program. If you keep a check on your monthly account statement then you can avoid missing your payments.

3) Monthly statement is ignored:Check your monthly credit card statement in order to avoid failing to pay your bill on time. In this way you would not only pay the bill on time but also immediately mark the error on the statement by verifying it. You need to inform the credit card company if you manage to find any discrepancy on the credit card statement.

4) Tempting offers associated with the cards:If you are driven by the attractive offers given by the cards for instance cash back or any discount offer then avoid the temptation that is generated by it. It often provokes you to fill your wallet with innumerable credit cards with different reward program.

You need to be aware that these companies would only extract money to fill their bank account. Therefore select a card that would be ideal for your financial condition.

5) The introductory rates are misinterpreted:Introductory rates are often misconceived by the consumers. Initially you might think that you can transfer your other remaining balance to a no interest account. You might have thought that this offer might help you to control your financial situation in a right way. You would be oblivious to the other interest rates that would show up with the end of the introductory offer. Before getting these introductory rates cards make sure that you read the terms and conditions so that you can avoid taking wrong decision.

The above written points are few common mistakes made by a consumer. You need to remember these points so that you can avoid financial hardships. They would help you to recover from the financial disaster and would help you to avoid the debt traps.