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By Julia Kukiewicz
Editor
Monday, 24 November 2008
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Credit Card Mistakes
Never ever do this with your Credit Card:
- Only pay the minimum monthly repayments
Credit card companies keep these low for a reason. Raise yours a little and pay off your balance faster.
- Withdraw cash
Only in a dire emergency should you consider paying 30% interest from the moment you press the ATM button.
- Use your card for online gambling
This gets you into the same trouble as cash withdrawals. Avoid.
- Confuse interest free with payment free
Failure to make your minimum monthly repayments whilst taking advantage of 0% balance transfer or purchases deals could land you with a hefty charge.
- Use one card for everything
Don't get caught out, one credit card is usually only capable of doing one job (two in exceptional circumstances.)
 Compare credit cards now!
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AS you may have already noticed, there are actually more than five things that you should never do with your credit card.
To pick a few at random: never put it anywhere near a child or an animal; never use it as a bookmark and never ever use it to try to break into a celebrity's house.
These are givens (or they should be) so you won't find them in the Top Five.
This countdown of credit card don'ts is reserved for the unforgivably sneaky: the things your credit card company will try, subtly and not so subtly, to persuade you to do which you never, ever should.
In other words, we've broken the magic circle to reveal the tricks of the credit card trade.
Credit Card Mistake #1: Only pay the minimum monthly repayments
It's good to have your credit card's minimum monthly repayment rate set as low as possible, right? Wrong.
If you've got a credit card debt and you're paying just 2-5% of it off every month then you're stretching out your borrowing, probably unnecessarily. In some cases, if you continue to spend on the card, your debt repayments will last until you die �" which is just what Mr Credit Card issuer wants.
Don't get trapped into paying less every month, which will only allow the debt to linger, set up a direct debit for a decent amount to pay off each month and stick to it.
Making savings somewhere else and paying off more each month �" even if its only a little bit more �" will save you a lot in the long run.
Credit Card Mistake #2: Withdraw cash with your credit card
Some credit card companies have been trying to rake in some extra cash by putting up the interest rates for cash withdrawals. If they were sky-high before the crunch, now they're astronomical.
And if an automatic charge of around 3% plus rates of around 25% aren't enough to put you off remember that there's no interest-free period when you withdraw cash, and only one way to avoid the charges.
Never use your credit card to withdraw cash. Ever.
Credit Card Mistake #3: Use your credit card for online gambling
You'd assume that the same rules apply when you use your credit card to gamble online as when you use it to buy online. Nope.
Gambling online is treated as a cash advance and not a purchase. That means you'll incur the same ridiculously high fees that you would if you took money out at an ATM.
Not only does the house always win, it's got friends at your bank.
Credit Card Mistake #4:Confuse interest free with payment free
If you have a credit card that offers 0% interest balance transfers or purchases that isn't the same as 'nothing to pay until the offer ends'!
You can keep rolling your balance over every month without making interest payments but you'll still have to make at least the minimum monthly repayment to avoid being charged.
The golden mantra? "Interest free does not mean payment free". Recite it when you do yoga.
Credit Card Mistake #5: Use one card for everything
Here's the lesson, the one 'never ever' that sums up all the rest: never, ever use one card for everything.
Credit card companies, like any other kind of companies, are only willing to give you a good deal up to a point.
If a credit card is described in a series of exclamation-mark inducing offers be suspicious and look at the small print. Most credit cards will work best if you only use them for one thing �" eg. a balance transfer only. Or cash-back only.
However, be wary of applying for too many cards or having an application rejected as this can damage your credit rating.
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