The presence of a credit card really feels the benefits. Because it makes it easier for many people to make payments. Especially now, most people prefer to do transactions without cash ( cashless ).
In its development, the function of credit cards then increased to adjust to the needs. In fact, more than that, some people make credit cards as part of their lifestyle.
Ironically, credit card owners sometimes seem to close their eyes that the frequent transactions with credit cards will burden their finances. From here many mistakes are made in using a credit card. Which ultimately brings the cardholder trapped in debt.
Credit Cards Are Debit Cards, Not Debits
The debit card requires you to have a new balance to use. While credit cards do not require that. Whatever your needs/purchases will be financed by a credit card. All costs incurred by your credit card will be payable to be paid.
Using a credit card like a debit card like cash withdrawals at ATM machines is clearly a fundamental mistake. Remember, cash withdrawals with a credit card will incur a fee with an interest of 4% or a minimum of USD 50,000 each time you make a withdrawal.
Credit Cards Are Not Additional Salary
If you consider a credit card as an extra salary, it means something is wrong in your financial planning. Beginner card owners are usually happy when a credit card application is approved and immediately use it for shopping for daily needs.
Remember, making a credit card like an extra salary will create a deficit in your finances. Or in other words, expenditure is greater than income. Back to the initial concept. Make credit cards only as a means or payment aid.
Tempted Discount and Stuck Shopping Items That Are Not Needed
Banks generally make credit card transactions as a means of making a profit. One way to maintain the market in the credit card segment is to aggressively provide promos or discounts if the transaction uses a credit card. Half of the credit card users who take advantage of this discount are people who actually don’t or don’t need the product.
Have Many Credit Cards
Credit card fees that must be incurred are annual fees. Many people are tempted to have a card because of the many facilities provided by the card issuer. What usually happens is that the more credit cards you have, the more difficult it is to control spending. Ideally, just one or two cards is enough to make your transaction easier while still paying attention to financial controls.
Credit Card Used as a Tool to Dig a Hole and Cover the Hole
Many people in emergencies use credit cards to cover debts. For example, using a credit card to pay installments on Home Loans, Multipurpose Loans, or Loans Without Collateral. This practical solution has a heavy impact later on if it is trapped in debt. By carrying out this practice, credit card users do what is termed digging the hole cover hole.
Tempted Only Pay Minimum Installments ( Minimum Payment )
The minimum payment is the most common trap that credit card users are not aware of. As if it was light in paying bills and only the installments swelled in the next period, making card users trapped in interest rates which increasingly plunged them into unpaid installments ( bad debt ).
Minimum payment in practice allows card users to pay only the minimum installments (10% of total bills). If this is done, the remaining outstanding bills plus interest will be a substantial debt.
Like Delaying Payments so Fines Appear
Delaying payments can occur because they do not care or are unable to pay according to the due date. The impact for users is the emergence of fines that make credit card bills increasingly swell and lead to bad credit reports that damage your banking history. The sequel impact, this makes it difficult to get a loan or change credit cards.
Ignoring Monthly Credit Card Reports
Periodically every month, the card issuer will send a card usage report to its customers. If you check it regularly, this will help you pay bills on time and control expenses every month.
Routine monitoring can also be an early detection tool if the credit card bills do not match. Tolerance given by the bank is 60 days if you want to file a lawsuit for invalid billing.
Frequently Exceeding the Limit to Increase the Credit Card Limit
Credit card limits remind card users to make transactions according to ability limits. The number of temptations of the product being sold often makes the cardholder trapped over the limit. Initially, the system will reject the use of cards that exceed the limit. Until finally getting an offer to increase the limit that makes you interested in using it. And the use of credit cards is increasingly out of control.
Credit Card Reports Are Not Referred to in Financial Plans
Actually, the credit card usage report is a reference that helps in making a monthly financial plan. All transactions are neatly recorded and can be used as a financial monitoring and control tool. Not routinely monitoring results in financial plans not running as they should, making you more wasteful.
Credit cards have both positive and negative sides. Right in use, the positive side is felt. If you make the wrong use, the negative is experienced. As the owner, you must be smart in using credit cards. Conversely, if you get caught up in a mistake like the one above, the credit card only harms you.