3 costly credit card mistakes you should never commit

How not to Use your Credit Cards

09:17 21 January 2014

To maximise the benefits of having a credit card such as convenience and security and avoiding the pitfalls from its misuse, credit card holders should learn to use their cards correctly and responsibly. 

Following are some tips to avoid committing credit card misuse.

• Using your credit card just for the rewards

Rewards are additional and incidental benefits that go with the credit card.  It could be considered when comparing the possible additional benefits that can be gotten out of a credit card on top of the other more important considerations before making a choice.  Thus, rewards should never be the major consideration for making purchases using your credit card.

• Buying more than what you need and what you can afford

The convenience that credit card offers has led many a credit card holders to overspending.  It certainly is a lot easier to pay for hundreds of pounds purchase just by presenting a plastic card compared to pulling out wads of cash from your pocketbook. However, the harsh reality hits you after a month when the statement comes in and you know it will be impossible to settle everything in one payment and you have to opt for minimum monthly payments. 

• Cancelling your credit card

Cancelling a credit card does not give a very good impression on your credit score, most especially if you cancel too early.  Being able to maintain your credit card for a long time is a good indication and can do wonders for your financial standing because it means that you are a responsible and honourable credit card holder over the years.

If you can work it out to have the card without paying an annual fee, opt to maintain your longest running cards active.  Even if you are keeping your purchase to a minimum, try to use the card regularly so it will not be cancelled by the credit card company.