What You Should Know About Your Credit Card?
Australians recently surpassed the U.S. in credit card debt, but many consumers make mistakes when using, applying for or even closing credit card accounts. There are common mistakes made by credit card users that can cost them money and hurt their credit scores. Consumers who educate themselves about credit cards are more likely to use them wisely.
Credit card account holders should carefully review their credit card statements every month. The first reason for this is to catch any unauthorized charges which could indicate credit card fraud. Another benefit is that the credit card statement itemizes all purchases and the account holder can track their spending and, if necessary, change their spending habits. If there is a secondary account holder it is important to track their spending since the information will impact the credit scores of both card holders.
It is important for account holders to be aware of all the interest rates and fees on their cards. While a card holder may have a 14% interest rate on purchases, the interest rate on cash advances could be as much as 21% and cash advances often carry other fees. When balances are transferred, payments on old balances only apply when new charges are paid in full, so the account holder must pay all new charges before he can reduce the amount of transferred balances.
Those who only make minimum monthly repayments on their credit cards will never reduce their balances since much of the monthly payment goes toward interest charges. An extra $10 above the minimum payment every month will help reduce the balance on the card. Interest rates may also be higher on amounts that exceed the credit limit on the card.
Closing cards improperly can have a negative effect on an account holder’s credit score. If a card with a balance is closed, it may appear that the card is actually maxed out. Closing the oldest credit card account may also be a mistake since it can shorten your credit history.
Account holders who have lost their jobs or are having trouble making repayments can contact their credit card company about receiving a lower interest rate or possibly even stopping repayments for a limited time. The worst thing a debtor can do is ignore the problem since it won’t go away.
Credit cards are an important tool in personal finance, but only for consumers that are educated in their use. Misuse of credit cards has spelled financial disaster for more than one account holder so consumers should know the best way to utilise credit cards.
larry says:
May 15th, 2011 at 11:51 pm
This is a really fantastic article as it teaches us the pros and cons of the credit card. No doubt the credit card is an important financial tool for all of us, misusing it would be disastrous and bad for us. The author makes this article an interesting one and is nice to learn more through reading!
Viraj says:
May 18th, 2011 at 5:55 pm
yes we should look into more details when we use a credit card,
Hidden fees,and the interest rates should be carefully reviewed,
and of course we should review our statemets monthly in order to detect any fraud.
thank you very much for these tips.100% ageed.
Jim says:
June 2nd, 2011 at 7:14 pm
This blog is very useful for students who has part-time jobs like me. These things should all be considered when getting credit cards. The blog is short but has good and important information
Thanks for the information!!
corpsereaper says:
June 6th, 2011 at 2:58 pm
i think i’ll have a look at my statement a little more closely now. i’ve also been thinking about getting a balance transfer to end the higher cash advance rate i’ve been eating up for for a while.
thanks for the information and like i said some more articles/posts on this would be very helpful