Learning to use credit cards wisely is among the most important parts of any personal finance education. Fail to do so, and you can easily find yourself staring up at a mountain of debt.
Here are some top mistakes to avoid when using that magic plastic.
1. Paying bills late
The golden rule of credit card use is to always pay on time. How do you avoid paying late?
For starters, consider demanding paper statements. Getting a letter in the mail makes each payment so much more urgent than an email reminder that the statement is ready.
However you choose to stay on top of your charges, make the change today.
2. Paying less than the full balance
After paying on time, paying balances in full is the most important habit you can develop. Paying in full and on time avoids interest and fees. Not paying in full means paying interest, which translates into handing over significant amounts of money for basically nothing. This is not the road to riches.
3. Paying foreign-transaction fees
Some lenders charge foreign credit card transaction fees that are as high as 3 percent. This levy is so awful that Money Talks News founder Stacy Johnson lists it among the 10 most infuriating fees in the world.
There is no need to pay such an outrageous cost. Instead, visit our Solutions Center and choose a card that doesn’t charge a foreign-transaction fee.
4. Missing out on a big sign-up bonus
Frugal people may not get to rack up hundreds of thousands of miles a year through credit card spending, but they can still enjoy some generous sign-up bonuses. The key is to refrain from applying for a new card until you’re assured of getting the best possible sign-up bonus.
Again, search for one of these cards in our Solutions Center.
5. Playing the zero-percent game
Many cards offer promotional financing offers of zero percent on purchases and balance transfers. Unfortunately, these perks can encourage you to spend money you may not have. Furthermore, maintaining a large balance eats up your available credit, hurting your credit score.
Playing the zero-percent game is playing with fire. These offers are common because banks know you’re likely to pay interest in the end.
You can look through more than a dozen categories, including:
- Travel rewards
- Cash back
- Gas rewards
- No annual fee
- 0% APR
Do you have tips for avoiding credit card debt? Share them in comments below or on our Facebook page.
Chris Kissell contributed to this story.