Avoid These 6 Credit Card Mistakes to Avoid Getting Trapped in Debt

 Having a credit card is the key to easier transactions. From shopping to vacations to paying for daily necessities, everything can be done using a credit card. But if you don't manage your credit card properly, it can backfire on your finances.

Just imagine: you take out an installment plan because you saw a 0% promotion on your favorite e-commerce site. Then, next month, you take out another installment plan for a new gadget. Before you know it, your monthly installments have ballooned, and you're starting to struggle with the constant bills. Plus, there's the added burden of late interest.

The above often happens not only because of poor money management skills, but more so because you don't understand credit cards. Many credit card mistakes can be prevented if we're aware and careful from the start. Let's use our credit cards wisely by avoiding the following mistakes.

Avoid These 6 Credit Card Mistakes to Avoid Getting Trapped in Debt

6 Credit Card Mistakes

Consistently Paying Only the Minimum

Many people think that by only paying the minimum amount, they're using their credit card correctly. However, this is a trap that can quickly balloon their bill. Paying the minimum means customers only pay a small portion of the total installment, and the remainder will be charged high interest each month. In the long run, this can make your total debt much larger than you imagined.

If this happens consistently, you might feel like you're paying every month, when in fact, your debt isn't decreasing. Therefore, prioritize paying your credit card bill in full every month to prevent interest from accumulating and to keep your finances under control.

Frequently Using Your Credit Card for Consumptive Items

Credit cards make transactions easier, but don't overuse them and use them to buy things you don't really need. Impulsive purchases like buying expensive fashion or hanging out at trendy cafes can feel easy when you swipe them, but feel heavy when the bill arrives.

If you can't control yourself, you could end up using your credit card every month for consumptive needs without long-term benefits. Try to get into the habit of creating a monthly budget and spending limits. Use credit cards for essential items that you can repay without issue.

Having Many Cards But Not Being in Control

Having multiple credit cards may seem great. It increases your limit and allows you to take advantage of more promotions. But if not managed properly, having multiple credit cards can actually be overwhelming. Many people end up forgetting due dates, forgetting which bills to pay, and ultimately falling behind.

Frequently making late payments or exceeding the limit on one card can affect your overall credit score. This is crucial if you ever need to apply for a mortgage, car loan, or other loan.

Therefore, it's best to manage the number of credit cards you have. If you don't need them, using just one is sufficient.

Ignoring Credit Reports

Another mistake credit card users make is ignoring credit reports. A credit report is a document that records a person's or business's credit history. It's crucial for credit card users to monitor this because it contains all your transactions, including purchases and credit payments.

So, if there's an error in your report—such as an unmade transaction or a bill that's been paid but not yet recorded—you can find out immediately and avoid it impacting your credit application and interest later. Checking your credit report isn't difficult, either, as you can do it on the Cermati app.

Late Payments Without Excuse

If you're just one day late on your credit card bill, the bank can immediately impose a fine and interest. Furthermore, this delay can be recorded in the banking system and affect your credit report. If you're frequently late on payments, not only will it be difficult to get approved for your next credit card, but also other loans or installments because you'll be considered high risk.

Disciplined payment is key to healthy credit card use. Set reminders in your calendar or mobile banking so you don't miss the due date. It's also a good idea to set aside a dedicated cash reserve to pay bills so you don't have to scramble for cash when the due date comes, especially if the bill is large and comes at the same time as other expenses.

Not Reading Promo Terms and Conditions

Who loves hunting for promos? Credit card promos are very tempting. They range from big discounts, 0% installments, cashback, and much more. But often there are hidden terms and conditions that can disappoint users. For example, there might be a minimum transaction, or the promo is only valid for certain purchases for a limited time.

If you don't read the details, you could end up spending more than you planned. In other words, instead of making a profit, you'll end up losing money. Therefore, before using a promo, make sure you read all the terms and conditions and understand when and how the promo applies. If you're careful, you can take advantage of credit card promos to save money on your transactions!