Making a mistake can sometimes be a good way to learn new things. But when it comes to credit cards, a little bit of knowledge can help you make the most of your card without having to learn from your errors. Here are some common mistakes around credit cards to avoid.
1. Choosing the wrong credit card
There are generally four different types of credit cards: interest-free, low rate, low fee and awards. Each has its own benefits, and depending on how you want to use your credit card, one type may suit you better than the other. Take the time to compare credit cards and make sure you pick one with the features that will best suit your needs.
2. Not knowing the terms and conditions
Using a credit card is essentially borrowing money, so every provider will have terms and conditions that come with the card. Take a look at the different interest rates and fees for CommBank cards, as well as the conditions of use that apply. Again, having a good idea of how you’ll use your credit card can help you decide whether the rates, fees, terms and conditions are right for you.
3. Missing minimum payments
If you miss the minimum monthly payment on your credit card you may be charged a late payment fee, which can impact your credit score. Keep the due date for your minimum payment front of mind each month to ensure you don’t miss it. For CommBank cards you can set up AutoPay so that you’ll never miss a payment. Try to pay more than the minimum payment when possible, as this will reduce the amount of interest you’ll have to pay.
4. Not making the most of the benefits
Credit cards can help you manage your cash flow, filling any gaps that exist between when you need to make a purchase and getting paid, for example. But some cards may also have a range of other benefits, from insurance on your purchases to international travel insurance and awards points. When it comes time to start using your credit card, make sure you’re familiar with the benefits so that you can take full advantage of all it has to offer.