Avoiding credit cards altogether
“Many people, especially millennials are afraid of going into debt and think credit card companies are just big bad wolves,” says Sean McQuay, a credit card expert for NerdWallet. This is arguably one of the biggest credit card mistakes most people make. The reality is that without a credit history, you’ll have a hard time convincing lenders to approve you for finance. If you do get a credit card, you can choose the best one that offers you the mist rewards. Having a credit card can come in handy when you need access to extra cash in the case of an emergency. As long as you manage it diligently, having a credit card can be an ideal solution for financial emergencies.
Not knowing your credit score
To apply for the right credit card for your needs, you need to know your credit score. This can save you from possible rejection.
Not shopping around
Make sure that you don’t apply for the wrong credit card by shopping around sufficiently. For instance, you should consider getting a credit card with a travel rewards programme if you’re a frequent flier.
You should compare as many offers as possible and choose one that best suits your needs and one that you will be able to afford to make repayments on.
Only making the minimum payment each month
Only making the minimum payment on your credit card balance can lead to additional interest and debt. One of the easiest ways to avoid credit card mistakes such as this one is by rather paying your balances in full each month.
Not reading the fine print
It’s important to make sure that you understand how interest rates work, how much the annual fee is, how much your credit card limit is, what other fees there are and how you can make a payment. You need to have a clear understanding of what you are paying for. Some credit card issuers charge additional fees. You need to understand how these fees work.