Common Credit Card Pitfalls

Most people have at least one credit card. Many of us have several. It is easy to become dependent on credit cards and fall into the trap of using them for basic living expenses. Learning how to be responsible with credit cards can be tricky, especially when credit card companies play tricks on you, the consumer, to get as much of your money as they possibly can. In addition to the credit card companies, you have to be wary of identity theft and aware of your own spending habits. Here are some common credit card pitfalls.

Variable Interest Rates

When you sign up for a new credit card, it is often because you were lured in by the low interest rate. These low, introductory offers usually seem too good to pass up. If you read the fine print, you will see that this interest rate is generally temporary. If you carry a high balance on your current credit card and it has a high interest rate, you can save some money by switching to a lower rate card. But, be prepared for your interest rate to go back up after a few months.

Late Fees

Credit card companies have a few tricks up their sleeve to get you to pay late fees. They will occasionally switch the due date of your monthly payment to try to get you to pay late. My credit card payment is generally due around the middle of the month. Every now and again, I will get a statement that is due early in the month. After months of having a payment due on the fifteenth, it catches me off guard to all of a sudden have one due on the fourth. The only way to combat this is to open the bill as soon as it arrives, take note of the payment due date and be sure to send the payment in with time to spare.

Sending the payment in a week or more ahead of the due date is prudent. Credit card companies are one of the few companies that don't give the customer a grace period. A grace period means that you can mail your payment on the due date and, as long as it is postmarked by that date, it will be considered on-time, even if it arrives a day or two after the actual due date. Credit card companies expect you to take the typical speed of the post office into consideration. They expect to have that payment in their office on the actual due date. If it is not, you will be charged a late fee.

As a customer, it is wise to be aware of these credit card tricks. Even the most responsible and early of bill payers can get caught in these traps. Always check your statement as soon as it arrives for the upcoming due date and for any possible late fees. If there are late fees, and you know you sent your payment in ahead of the due date, even if it was only by a day or two, you can call your credit card company to complain. Most credit card companies will waive the late fee once you have called. The customer service representative at the company may give you a hard time, but stand your ground. I have never had one refuse to waive the late fee. Of course, if you are a repeat offender, they may refuse. But, an overall history of on-time payments will help you because they do not want to lose you as a customer.

Identity Theft

When we think of identity theft, we usually think of a major invasion of our privacy and our personal information. But, most often, identity theft usually involves only one stolen credit card number. Always look over the charges on your statement to be sure that they were your purchases. If you see any purchase that you did not make, call your credit card company right away. The sooner you call, the sooner you will be able to stop the access to your card and your credit. Credit card companies will not hold you responsible for charges incurred by an identity thief. You will need to cancel the credit card in question and the company will issue you a new card with a new number.

Purchases

Many people make the mistake of using their credit card for every purchase they make. The general rule of thumb is to not use credit cards to purchase consumables. This includes groceries, gas and clothing. You should budget enough money each month for these items and stick within your budget. If you buy these things on credit and can't pay your balance off in full each month, you are paying interest on your consumables. So, not only are you still paying for the groceries that you ate months ago, you are also paying interest on the original charge.

Save your credit card for larger purchases that you can't afford out right. Typically, emergency expenses, like a sudden car repair that you hadn't budgeted for, are a good reason to use your credit card. Use it with the understanding that you will be charged interest every month on the balance until it is paid off. Then, work very hard at getting that balance paid off as soon as possible. Ideally, large purchases that are not an emergency, like new furniture, should be saved for. If you are going to buy these items on credit, be sure to use the card with the lowest interest rate, if you have more than one credit card.

If used carefully, credit cards are a useful tool for the average consumer. It is prudent to always check you statement for changes in the interest rate, late fees, and unknown charges. Being conservative with your credit card and saving it for emergencies will help to keep your balance low and give you a good credit rating. Be aware of the common credit card pitfalls and you will never have a credit problem.