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How to avoid the most common credit card pitfalls

By Jakob Jelling
www.cashbazar.com

Credit cards are considered as one of the most important tools you have in your hand. Even though the benefits of credit cards overweigh its disadvantages, if used incorrectly credit cards can lead to huge debt problems. The interest rates of credit cards are usually higher than any other type of money you can borrow. Here you need to be very careful while dealing with credit cards. Here we can discuss the most common credit card pitfalls which can be avoided by controlling your credit card usage.

- Before considering any financial product, especially a credit card, make sure that you have enough income to pay your bills and overheads. If you think you cannot correctly pay monthly bills on your credit card don’t take one by hearing the polished words of a credit card agent.

- Most of the credit cards available in today’s financial market are having a high rate of interest. So if only a higher interest credit card is available to you don’t purchase it as you have to pay large amount of money on your monthly bills. If you own a high interest credit card use it for small purchases and remember to repay the amount in full before the interest accrues. Timely repayment of your debts will help to increase your credit rating which will enable you to get lower APR on future credit card deals.

- While making any purchase with your credit card remember to charge only the amount you can repay in full each month.

- Try to keep away from pre-approved credit card offers with low interest rates. These types of interest rates are usually offered for only a short time, mostly when the period is over you have to pay a higher interest rate. So it is better not to deal with such credit card offers.

- If you have huge outstanding balances on your account try to pay off it as early as possible. If you are not paying it correctly you need to pay large amount of interest charges for your outstanding balance. Also, incorrect payment of your debts will make a bad credit history, which eventually thwarts you from getting any future credit.

- If you are paying only the required minimum payment each month then it will take much time to clear your balance. That is, if you have a $3000 balance at 15% interest and you are paying 3% on your remaining balance every month, then it will take many years to pay off your debt. And you have to pay huge bucks in interest charges also. Hence it is advisable to pay more amounts each month to pay off your debt.

You can avoid credit card pitfalls by keeping an eye on all these factors said above. Try to avoid excessive use of your credit card for all your expenses. Also if your use your credit card for almost all your expenses don’t forget to repay your monthly bills on time. Remember it is all about money so you need to be careful and well aware of your income and expense.

About the author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.

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