Credit card is one of the favorite payments. Using a credit card helps ease and your practicality in transaction. Moreover credit cards also provide many benefits that can help the owner get more cost-efficient transactions. For example, benefits in the form of cashback, gift points, vouchers, discounts, airmiles, 0 percent installment and so forth.
As we all know, credit cards are non-cash transaction tools based on loan money from banks with high interest. If not careful and wise using it, credit cards can be a source of dangerous financial catastrophe.
Many people are up to the stress of being chased by debt collectors because of already entangled credit card debt. One side, credit cards can be very useful to help ease the transaction. At the same time, credit cards can be a source of dangerous financial troubles.
You should make sure to avoid the 4 major mistakes of using a credit card, as quoted from the comparison and submission of financial products HaloMoney.co.id, here is the following mistakes that people tend to do with credit cards:
1. Using Credit Card Without Plans.
Many people use credit card without plans. If you swipe your credit card to transact various forms but not sure you can pay the bills later, it's the same as inviting serious financial problems. So, every time you swipe your credit card for transactions, make sure you have the money to pay when the bills come later.
2. Pay the minimum payment Credit card.
Banks allow users to pay bills in the minimum value. This will be the entrance to your serious financial disaster. Why is that? Credit card interest is very expensive, reaching 2.25 percent per month or 27 percent per year. If on the next bill you pay back the minimum payment, as a result the interest will continue to roll and you may be unable to afford it. So, make it a habit to use a credit card with discipline so that every time the bill comes, you pay it 100 percent so there is no need to pay interest.
3. Consider credit card as an emergency fund.
Credit cards has cash withdrawal feature or cash advance that allows the owner to withdraw money from ATM. The difference is, cash withdrawal using credit card costs are not cheap. Each withdraw funds using a credit card at an ATM, the credit card issuer will charge a fee, usually in percentages of about 6 percent of the withdrawal nominal.
With this cash advance feature, credit cards can indeed be a "helper" of cash needs in an emergency. But, always remember when the funds that you withdraw using credit cards are loan funds from banks that interest is expensive. So, be wise to use it for cash withdrawals and make sure you have the funds to pay the bills one day.
4. Use credit cards for hunting discounts.
The temptation of credit cards is great. Many people who eventually stuck to apply for credit cards because of discounts. For example, credit cards usually give discount for a particular transaction. Many people are not aware of the discounts using a credit card, there are also an interest to pay later when the bills comes out.