Holding a credit card is a big responsibility. Using the credit card in the correct way can help you build a great credit profile that helps you get the things that you want and need in the future. Using the credit card incorrectly can ruin your credit, trap you in debt, and cost you thousands of dollars in interest payments before the debt is paid off.
The consequences of using your credit card incorrectly can resonate for years, making it impossible for you to continue moving forward and making your life better. In order to ensure that you will avoid the consequences of using a credit card incorrectly, you should avoid these credit card pitfalls at all costs.
Neglecting To Read All Of The Information
One of the worst credit card pitfalls to fall into is signing up for a credit card without reading all of the information that comes along with that credit card. There are some credit cards that sound like a great deal in the advertisement, but have so many fees detailed in the fine print that nearly the entire balance is gone before you get the card. There are many people that neglected to read all of the information provided and found themselves paying expensive annual fees or interest rates that were much higher than they expected.
Before you apply for a credit card, read all of the information to learn about the fees and interest rates associated with the card you are applying for. You should also read all of the information that comes with the card or that comes with each credit card statement to ensure that you know what is going on with your account.
Taking Cash Advances
Obtaining cash advances from your credit cards can be extremely expensive. While the interest rate for purchases may be between 10 percent and 20 percent, the interest rate for cash advances is often much higher and may also trigger additional fees.
Because the credit card companies can earn so much money off of allowing you to take a cash advance on your credit card, they make it as easy as possible for you by allowing you to use a PIN to take money out of an ATM or sending you convenience checks that you can write to yourself or other creditors. It is best to completely avoid taking out cash advances using your credit card, as it is one of the most expensive ways to obtain cash.