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Sunday, July 20, 2014
How can you avoid falling into the trap of bad credit card debt? You can start by avoiding these common mistakes card users make:
1. Failure to Read the Small Print:
Providers of credit cards might tell you that the reason the Terms and Conditions are printed in smaller text is that they do not like to bore you with the many details. However that is where they hide or disguise the real cost of whatever you are signing up for.
As the consumer, it's your responsibility to check everything and see to it that there are no any traps that you could easily trigger. If the text printed the form is too small for you to read, call your credit card provider.
2. Misconception on the Introductory Offers:
It's easy to give in to a tempting headline. People who write these headlines are paid to make them as alluring to people as possible. Usually, when card users pay too much attention to the good sides of a credit card, they simply ignore the details, where the negative aspects are usually concealed.
For example, if credit card offer says three months interest free balance transfer, look out for interest rate and transfer fee after the interest free period ends. In additions often included in the smaller text are conditions like, if you miss a payment, whatever is left on the offer will be withdrawn.
3. Making Only the Minimum Payment:
The ease of servicing the debt is one of the advantages of using credit cards -- you just have to pay the minimum percentage of your balance each month (example 4%).
Paying only the required minimum can cost you more actually. This is because the interest is calculated by the day. For each day that you have a balance on your card, you're being charged on interest for each penny.
4. Having Many Credit Cards:
Usually, people believe that having many credit cards will help their credit rating. This might be true based on the balance you maintain on your credit card.
The downfall is that it will make it more difficult to obtain new credit. Lenders will wonder whether you already have too much debt and may be unable to make repayments. Another disadvantage is that it increases the chances of getting deeper into debt.
If you want to receive more free legal advice on finance, credit, and banking, simply visit Consumer Credit Legal Service WA Inc by clicking on the link provided.