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Using a credit card can be a good way of covering emergency expenses, but if used in the wrong way, can make that purchase a lot more expensive.
In this month’s MoneyTalk blog we have put together a list of things to avoid when using a credit card.
Putting little emergency purchases onto a credit card can help if your short of cash. However, try to keep track of what you’re spending, otherwise you could soon reach the limit. Spending right up to the card’s limit will not only take longer to pay back but will also cost more in the monthly repayments.
It maybe unavoidable to miss a payment one month, but this can make things difficult later on. Every time a payment is missed, a late payment fee will be added to your account. This can also be subject to interest too.
If you’re at your card limit, the late payment fee could also push you over your limit. This means you could get charged again! Missing payments could soon add up to more debt that is difficult to get out off.
Only paying the minimum payment every month means it will take longer to pay off the card balance. If you only make the minimum payments, interest is then added to the remaining balance. The interest added can sometimes be just as much as the minimum card payment that has been made.
Keeping the credit card balance to a small amount, means that you will be able to pay it off quicker without too much interest being added.
It can be very tempting just to withdraw some money from your credit card. Unfortunately, credit card providers will charge you every time that you make a cash withdrawal. The charge will then be added onto your card balance making it longer to pay it off.
Make sure that if you lose your credit card or it’s stolen, that you report it straight away. The card provider can stop the card before anyone else uses it.
If you’re struggling with credit card debt, there is help available. Citizens Advice Bureau and StepChange are free organisations that can help.
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