How NOT to Use a Credit Card

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This week we’re going to be blogging about what to do when times are tough as well as some of the things you should not do. The first post is about how not to use your credit cards. So would you like to want to file for bankruptcy next year? Here are some ways to get yourself in big financial trouble. Don’t worry, you won’t be alone…

#1. Apply for a Card you Clearly Shouldn’t Have

Credit Cards are designed to suit different lifestyles, incomes, needs and uses. If you’re a student, get a platinum or business card, or if you’re a stay at home mum, get the frequent flyer card and see how useless it will be to you. Don’t think about what might suit you and sign up anyway. This is a sure way to start your troubles.

What you should do: Apply for the credit card that best suits your needs. So if you are a frequent traveller, then sign up for a frequent flyer rewards card that will let you earn points towards flights. Likewise, if you’re carrying a significant balance and the interest is racking up every month, you should look for a credit card with a balance transfer offer where you can move your balance and get a lower rate of interest for as long as possible. There are also a lot of cards with low interest rates available to cater for the occasional spender who tends to pay off their balances on time, or shortly after they’re due to be paid.

#2. Be Ignorant of The Fine Print

Don’t bother finding out the terms and conditions, or knowing the hidden fees and charges, or the annual fee or any other pertinent details relating to your card. This way you’ll be sure to minimise its use to you and maximise its cost.

What you should do: It would be wise for you to at least familiarise yourself with the basics of any card you have. At the bare minimum you should know what interest rate you are charged for balance transfers, purchases and cash advances. It would also be helpful to find out in what order payments are applied (e.g. you pay off a cash advance first, followed by a balance transfer, etc.).

#3. Get lots of Credit Cards

This will ensure that you lose track of your cards, repayments, the catches and that you overspend and build up debt.

What you should do: If you have a lot of credit cards, you have a lot of time being wasted on management and admin that could be spent doing something more beneficial. Having a large collection of open credit cards makes it easier to miss payments, pay fees for rewards programs you don’t use or pay an ongoing annual fee for a card you don’t even use. Consolidate your credit cards where possible to make it as easy as possible to manage them.

#4. Don’t Set or Stick to a Budget

Never keep track of your income or spending, just spend, spend, spend. Or if you do set a budget, make sure you don’t stick to it. If you stick to it, you might not get into debt.

What you should do: Without a budget your spending can easily get out of control, whether you are a cardholder or not. Our advice, to everyone, would be to draw up a budget as fast as possible and stick to it. It’ll take some getting used to, but the end result is so much better than finding yourself mired in debt because of ill disciplined spending. Click here for a series of posts on managing your money.

#5. Buy Lots of Stuff You Don’t Need

The more you spend, the happier you’ll be, right? So rack up that debt and spend away. Wait and see how happy you’ll be!

What you should do: Consumerism is rampant in our society, but how happy will material things really make you? We’d argue that it’s much better to stop buying crap you don’t need, live within your means and maybe start to enjoy the simpler things in life that also tend to be either really cheap, or better yet, free!

#6. Don’t Pay Your Balance on Time

Better yet, don’t keep track of when your balance is due. That way you’ll be sure to miss it and pay loads of interest.

What you should do: Looking for a one way ticket to financial ruin? Then don’t pay your balances on time! If on the other hand you like sleeping at night, get organised and start paying on time. It’s not difficult! Set up an automatic monthly payment to cover at least your minimum payment, but ideally the whole balance.

#7. Loan Your Card to Everyone & Tell Them All Your Pin

This way it’s not just your wild spending that ends up on the card, but everyone else’s as well! They’ll probably give your credit card number to all sorts of questionable websites and help both your money, & maybe even your identity to get stolen.

What you should do: Not only is this a great way to waste heaps of money and possibly end up with someone else buying things using your identity, but it’s a great way to get stressed fast! Never, ever give your credit card (or debit card for that matter) to someone you don’t trust.

#8. If Your Card Gets Stolen or is Lost, Don’t Bother Reporting It

That way the thief can have a grand old time and it’s all on you.

What you should do: If you’re card has gone missing, do something about it as soon as you find out. The longer you wait, the more opportunity you give a potential thief to start spending on your account.

#9. Fall For Every ‘Sale’ & ‘Special Offer’

If you read the fine print on many special offers, you’ll probably discover that they’re not that special after all. Likewise, ‘sale’ items may have been marked up 70% before being reduced by 50% so if you fall for them all, you’ll be sure to buy some way overpriced products and waste plenty of money (& then pay interest on them if you keep to bad habit #6).

What you should do: Carefully research the things you buy, before you buy them. Do you really need a new flat screen TV? Well, if your old one has died and you see a new one for sale that has good reviews and some discount, then by all means buy it and save some money. However, just because something is on sale, that doesn’t mean you are obliged to buy!

#10. Don’t Bother Checking Over Your Statements or Paperwork

This way you’ll miss any mistakes the bank could have made that usually aren’t in your favour and pay MORE.

What you should do: Are credit card companies perfect and impervious to human error? Absolutely not! When your monthly statement comes in, check it over thoroughly for errors. You wouldn’t be the first to get a surprise in the post.

So the bottom line is, if you follow these bad credit card habits, you’ll be joining the worst credit card users in the world and be steam rolling your way toward complete brokenness! Our advice? Maybe check out our website for a card that suits you and make sure you don’t fall into the traps of credit cards.

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