Common credit card mistakes you should avoid

Credit cards often receives lot of flak – partly because of humans using it. Yet it can be a very good tool to manage your finances. And it can also be a starting point for financial quicksand – which can manifest itself in form of unending and snowballing payments – thanks to the high interest rates they charge. However, you can avoid getting into this quicksand by avoiding some common credit card mistakes.

common credit card mistakes

What are some common credit card mistakes you should avoid?

Here are 7 common mistakes –

1 Not paying credit card bill on time 

Pay your bill on time, and in full. This is the first rule you need to set for yourself before using credit cards. Not paying your credit card bill on time can lead to hefty penalty in form in interest payments. In India, this credit card interest can be as bad as 3% per month (or even worse!)

This also usually indicates a lack of financial discipline, which makes it difficult to get rid of this debt easily. It can be a classic case of making compounding work against you!

2 Paying only the minimum balance on your credit card

Pay your card in full – NOT minimum amount due. If you pay only the  minimum amount due, you will have to pay interest on the entire amount due (not just the balance due after making part payment). In case you miss even minimum amount due, you might be slapped with a fine in addition to the interest rate.  Some of these conditions may be overlooked initially, as most of us don’t bother going through terms & conditions!

3 Converting purchases to EMI

Credit cards often offer an option to convert your bill and some purchases into EMIs. But the catch is that it is rarely free. You still end up paying good amount of interest amount. Thought this interest is usually lesser than the interest charged if you default on card payment!

4 Impulse buying just because you have access to credit cards

Your credit card can soon become your enemy if you don’t spend judiciously.  Impulse buying is one of the major reasons for this! Aspirational upgrades is another reason. So, going for a better model of television just because you have a credit card or shopping for 8 new pair of clothes not because you need them, but because you have a credit card at that point of time – these things can soon add up!

5 Not checking your card statement properly.

Keeping a track of your purchases is important, else you may miss out on some charges which you are paying but are unaware of. Or some charges which you have’t incurred. Or some hidden charges you are unaware of!

6 Not taking advantage of deals and rewards

One of the reasons for popularity of credit cards is reward points they offer. In addition, many cards come up with exclusive deals which you can take care of. For e.g. Amazon may partner with, say ICICI credit card or any other card can provide a 10% cashback.  Standard Chartered Bank credit card can provide good rewards on shopping at supermarkets (in India at least). Or American Express has great bonus point system which you can use. If you are using a particular service regularly, you can also try for co-branded cards and get deals.

7 Shopping only because you have deals and rewards!

Like many other benefits associated with credit cards, this can be a double edged sowed. While deals and cashbacks are good, buying stuff only to get that can backfire. If you are getting 10% cashback on something, remember – you still need to shell out other 90%.


What are some other credit card mistakes you think people should avoid?

Do share!


3 thoughts on “Common credit card mistakes you should avoid

  1. It’s funny how people think credit cards are the problem, not overspending.

    Credit cards give you a power – to pay without money actually changing hands.
    It’s a promise to pay.
    In many times it shields you in the form of insurance.

    So, to not use credit cards means giving up on a superpower, because one is too weak to use the power responsibly.
    Yet credit cards are the ones getting the bashing.

    The problem lies in not having control over one’s finances. That’s the part one should fix.

    If Thor was sloppy and careless with the hammer, should he just leave it home, locked in a box, or learn to master it?

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