Personal Credit Cards

What credit card pitfalls should I be aware of?

Credit cards are expensive if not paid off

If you don’t pay the minimum payment on your credit card in each payment cycle, expect to be charged a high interest rate as well as late fees. Your card will also be flagged at the collections department of your credit card issuer, which can create a lot of extra hassle.

Credit cards cannot be paid off using other credit cards

The balance of your credit card must be paid off with money in your bank account. Credit card providers have strict rules which will not allow you to pay off one credit card with another.

Don’t focus too much on the rewards

The incentives offered by credit card providers such as Fly Buys or Air Points rarely hold a benefit above 2% of what you spend. Don’t be tempted to overspend to try to reap the rewards.

Avoid withdrawing cash on your credit card

The interest is high and starts getting charged as soon as you make the withdrawal. Also, there could be additional fees and you won’t earn any rewards.

Be careful of moving your credit card debt

If you are being charged more than need be with your credit card provider, you may look to reduce the interest charges by transferring the balance to a new provider with an introductory offer of a low or 0% interest rate. Keep in mind the introductory interest offer will eventually run out and the debt you have transferred still needs to be paid.

Beware of hidden charges

Always reconcile your monthly statements, checking them against receipts or your own records of purchases you have made during the month. Make sure the correct amounts have been charged and keep an eye out for unexpected charges you might not need, for example, subscription or membership fees you didn’t know were still renewing.