With the number of rewards and rebates given, credit cards are certainly popular amongst Singaporeans. However, it is also relatively easy to get carried away swiping and spending using the credit card. Have you ever missed your monthly payments and notice how the interest rate snowballs? Probably this might have led you to avoid using a credit card. 

However, it comes down to the way you manage the use of your credit card. Credit cards are frequently linked to the high rise of debts. Many people, especially youngsters never learn the right habit of handling one or more credit cards. To understand the best way to use a credit card, it is first important to recognise the mistakes you can make with a credit card. 

Stop making these credit card mistakes 

Often, credit card holders get carried away with their credit card limit. While it can be exciting to have a few thousand dollars at your disposal simply by swiping a card, it comes with a cost if you do not know how to manage your credit card. Here are some common credit card mistakes that you should avoid at all costs to maintain your financial health. 

• Spending beyond budget

It is common to be tempted to purchase that limited edition designer’s bag or the latest mobile phone as you shop. Moreover, with the rewarding rebates and discounts, it can feel like a bargain when you make the expensive purchases. However, this is far from the truth. If you start spending beyond your monthly budget, you can be caught up with credit card debt spiral which will affect your financial standing in the long run. 

• Missing due dates

One of the major factors contributing to high-interest rates is your delayed payments. Late payment fees are often costly especially when you are short of fund. With every delayed payment, you are susceptible to incur a high-interest rate that multiplies until you have made full payment of your pending due. Missing payments will also result in a poor credit score. 

• Ignoring the billing statements 

Your monthly statements are the records of your payment activities. You get to see if the payments made tally with your transactions made. If you choose to ignore these bills, you might miss to note any errors or fraudulent transactions. You also miss the chance of tracking your expenses and can end up spending more than you should.

• Only making minimum payments

Strictly paying only the minimum sum of your monthly payments is the main reason for compounding interest. It is easy for you to fall into a whirl of debt as you neglect to pay the full sum. Although you can avoid paying the penalty charges, you will still need to pay the high-interest for the remaining amount on your credit card. 

• Enticed by the welcome promotions

Exclusive giveaways and deals are often the marketing tactics of credit card providers. The rewards are indeed alluring to many Singaporeans, causing them to apply for a credit card without understanding the details. It is an illusion to assume that the offers are larger than the credit card itself. Your aim should be the credit card and not the enticing welcome promotions. 

3 tips to be a better credit card user and avoid credit card mistakes 

Credit card is a useful tool if used wisely. It can help towards financial freedom. Used recklessly, it can push you down the debt spiral. Here’s how you can make the best of a credit card. 

• A well-planned budget

Though it may seem as the most basic idea, this is undeniably the golden rule for a responsible credit card user. Having a well-planned budget will keep you away from all the unnecessary shopping and posh dine-ins. Focus on your needs before wants when spending using your credit card. 

• Use debt repayment calculator

If you are either easily confused or careless in the way you spend, you could certainly opt for a more professional tool to help you in managing your liabilities. With a number of debt repayment mobile apps and online calculators, you can easily track your expenses. You can set aside the amount you to need pay every month without worrying of losing track.  

• Know what you’re signing up for

Don’t forget to carefully read and understand the terms and conditions of the credit card you intend to apply for. You can also ask as many questions as you wish to the credit card provider, so you are fully aware of the deal you’re about to commit to. It would be best to take a few days before you make up your mind.

Be credit card smart by avoiding credit card mistakes

Anyone can be easily tempted to take advantage of the credit card convenience. Now that you have discovered the dos and don’ts of owning a credit card, you are in control of your credit card management.