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Avoiding credit card traps

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credit card traps

For many people, credit cards seem too good to be true. It can feel like you are getting whatever you want, without paying real money for it. Then the end of the month comes around and reality sets in. Managing your spending and paying for a credit card takes discipline. Read on to learn how to avoid common credit card traps.

Low introductory rates
While these can be attractive offers, you should always read the fine print. Find out how long the good rates last and what they become after that period. You will need to know about interest rates, grace periods, finance charges and transactions fees. Only agree to a card that has terms which are favorable to you and that you can manage. Otherwise, your purchases will end up costing you more and you could end up deep in debt.

Buy now, pay later
This is a trap that can begin on a monthly level and end up lasting a lifetime. It can be so tempting to make purchases with your credit card and not think about how much you are spending. But remember, you will be expected to pay real money when you get that credit card statement, and if you have an inflated vision of how much money you have in your account, you might have a rude awakening when you open the mailbox. The best way to avoid falling into this trap is to set a limit for yourself on how much you charge and stick to it. An easy way to keep track of your credit card spending is to keep all your receipts, and tally them up once a week when you pay bills. Also remember to pay your credit card bill on time so you don’t end up with late fees or a lower credit score, which can cost you dearly in the long run.

Only making the minimum payment
Depending on how much you spend, your credit card company will have a minimum balance that you must pay to remain in good standing. But if you only pay the minimum, you begin accumulating finance charges on everything you buy. Remember, this is how credit card companies make money … and how you lose money. Only paying the minimum stretches out how long and how much you pay for purchases. Instead, make a commitment to yourself to pay off your balance, or at least a large portion of it, each month. If you find that you can’t afford to do this, you may need to change your spending habits.

There are a number of other credit card traps that you can fall into. The best ways to avoid these traps are to educate yourself about what credit terms mean, read the fine print on offers and make a plan that you can stick to for using your credit card.


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