Credit cards – Are they a boon or a curse? The same old question.

If you ask me I would say that it depends upon how you use them. If you’re able to handle your cards properly and avoid common credit card mistakes, then it’s better for your financial life. It helps you to have a good score and most importantly, it makes your life easy!

However, it is of utmost importance to use your credit cards properly. So, make sure you avoid these common credit card mistakes, which you might be making unknowingly.

1. Not paying heed to pay the outstanding balance. Do you think you’re doing a good job if you make only the minimum monthly payments on all your cards within the due date? No. By doing so, you’re making interest payments on your outstanding balance.

The longer you take to repay the outstanding balance, the more interest payments you’ll make on the card.

2. Not reporting your stolen credit card immediately. If you’re lucky, you can realize you’ve lost your credit card before a con person charges your card for his/her own monetary benefit. If you can report about your stolen card before there are any fraudulent charges, you won’t be responsible to pay the amount.

So, report your stolen card immediately. Do not even delay an hour.

3. Taking a cash advance on your credit card When you use your credit card to pull money from an ATM, you’re charged with an interest rate immediately. You’ll have to pay the interest even if you repay the amount the same day. The interest rate can even be about 4% on the withdrawn amount. Moreover, you also have to pay a fee for this service.

So, be extra careful not to use your credit card for a cash advance. Use a debit card instead.

4. Closing your credit cards without giving it a second thought. Canceling your credit card is not an option when you’re trying to repay your credit card debt or limiting your expenses. Doing so, it may reduce your credit score.

When you cancel your old credit cards, it reduces your credit history. Moreover, closing a card reduces your available credit too, thus affecting your credit utilization ratio negatively. In turn, your credit score may get reduced too.

So, it’s better to keep your credit cards open, and not charge your cards for any amount.

5. Making the wrong decisions to chase rewards. Credit card rewards are definitely enticing. You tend to charge more to get lucrative points which you can redeem to buy items. But, by doing so, you spend more which you could have done without.

Moreover, if you’re not able to pay the entire outstanding balance within the payment date, then you’d have to pay interest on the remaining balance.

You should use the card to get discounts on your hotel stay or flight tickets. But do not use a card just to get rewards.

6. Accepting the interest rate on your card without negotiating. Are you using a credit card with a very high interest rate? Well, that doesn’t mean you’ll have to continue with it lifelong. After using the card for a while, you can call the creditor and negotiate to reduce the rate of interest.

If they don’t agree, shop for a good card and compare prices. You will get a better rate of interest if your credit report and score is good.

7. Waiting for the last date to pay your bill If you wait for the last day to pay your bill, then if there is any technical problem in an online transaction, you might have to pay a late fee. So, it is always better to make the payment a few days early.

Moreover, if you think that you’re about to max out your card, you can immediately make payments and reduce your outstanding balance.

8. Not knowing the terms and conditions of your cards. It is one of the most common credit card mistakes to not read the terms and conditions of your credit cards carefully. You need to go through the terms to be aware of the consequences of not making credit card repayment on time.

Also, you need to know about the rewards programs in details so that you can take advantage of the offers and make money with credit cards by getting attractive discounts.

9. Charging your credit card for an amount that exceeds your cash. As I have already said, do not get enticed to charge your card for an amount that you can’t pay now with cash. If you do so, there’s a higher chance of falling into debt problems.

So, if you can’t afford a thing, for the time being, wait for some time till you save the amount. Or else, you can wait for the next billing cycle of the credit card so that you have time to repay the bill.

10. Transferring balance without doing the calculations Transferring balance to a low-interest card is a good move to consolidate your credit card bills. However, before you do so, do the calculations.

When you opt for balance transfer method, you have to pay about 3% of the balance as an upfront fee. So, if your balance is relatively small, then think twice before opting for this consolidation method.

So, avoid these credit card mistakes and manage your credit cards in a way that it’s beneficial for your financial life.