Top 5 Credit Card Blunders

Regardless of how stable or secure your financial situation is, there are several traps to avoid when dealing with credit cards.

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#1 – Avoiding or Misunderstanding the Fine Print

If credit card features were only limited to the offers displayed in advertisements, then we would all be living in a much happier (and cheaper) world. However, these are only teasers and abiding only by the marketing copy will hit your pocket hard.
A couple of hypothetical instances where you can fall flat on your face by not reading your Terms & Conditions:

• Enjoy a generous 2.9% p.a on balance transfers for 12 months*
• *Balance transfer will cease to proceed if full balance is not paid off each month. Any remaining balance will be reverted to the standard interest rate of 18% p.a.

• No annual fee*
• *No annual fee when you spend $35,000 or more on your credit card per annum. Standard annual fee of $140 applies otherwise. Excludes first year annual fee.

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#2 – Condemning yourself into Balance Transfer Hell

Balance transfers are without a doubt the saving grace of reducing your credit card repayments – when utilized correctly. The most common scenario people fall into when they become hammered by balance transfers is as follows:

• You have a high balance on one of your credit cards. You transfer that balance onto a new credit card with a balance transfer offer.
• Wanting to reduce your credit card debt/management as much as possible, you cancel your old credit card to only focus on repaying your transferred balance.
• Over the period of your balance transfer, a couple of emergencies arise and you fall into financial strain. Without second thought you access your transferred balance credit card and cover the issue.

When a purchase is made on top of your balance transfer credit card, the transferred balance is essentially ‘locked up’ until the purchase has been paid off. Interest free days are frequently excluded from purchases made on these cards while the introductory offer is being carried out.

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The solution? Keep that old credit card instead of shredding it – you never know when an emergency can arise, or the only form of accepted payment for a purchase you want is via credit card.
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#3 – Picking a Credit Card which Doesn’t Suit You

Other than competition, there’s a reason there are so many different credit card offers available in Australia – different types will suit different individuals and lifestyles. Choosing the wrong card for your finances is like choosing the wrong car for your family. While your brand new 2-door convertible will impress and get from A to B, it’s a tight and uncomfortable fit for your children.

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An example which you can regret and end up spending more than necessary:

• You own a ‘Gold’ status credit card, which has a high interest rate, high annual fee and a reward’s program. Fair enough – you pay your balance off in full, and spend on it regularly. This will compensate for the high interest rate and benefit you with lots of rewards.
• However, you never travel internationally, thus rendering your travel insurance and security benefits useless. The cost of these benefits are made up in your annual fee, and therefore you are effectively paying something-for-nothing.
• The solution? There are plenty of regular reward credit cards available which allow you to only pay for the features you use.

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#4 – Only Comparing Credit Cards from your Current Bank

The days where the time you’ve spent with your financial provider becoming an asset are fast dwindling. By avoiding different banks for credit cards, you’re essentially robbing yourself of potentially cheaper cards. For instance, if you’re a current Citibank customer and are interested in a low interest credit card:

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• The Citibank Clear Card, Citibank’s flagship ‘low interest rate credit card’ offers:
• 15.49% p.a on purchases.
• A $65 annual fee.
• 0% on balance transfers for 6 months.
• $40 on late repayment and overlimit fees.

By simply going with your main financial provider’s card, you’re paying more than necessary. Why fill up $1.20 a litre at the closest petrol station when you can pay $1.07 at another station down the road? Let’s analyze one of Australia’s better low interest rate credit cards, the ANZ Low Rate MasterCard. it features:

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• The ANZ Low Rate MasterCard, ANZ’s flagship ‘low interest rate credit card’ offers:
• 11.99% p.a on purchases.
• A $58 annual fee.
• 0% on balance transfers for 6 months.
• $20 on late repayment and 5% on overlimit fees.

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#5 – Not Checking your Statements and Recent Transactions

The ease of credit cards without a doubt is ‘paying with plastic’. If you pay $50 or $200 in cash, you are visually and tangibly spending more money. Pay with plastic and you can bury the price and repayment deep in your mind, and adapt a ‘pay now, worry later’ attitude.
Recently a staff writer at Credit Card Finder learned first hand the benefit of checking his transactions every couple of days.
“I took a look at my recent transactions online and found out that my most recent $17.20 purchase at a fast-food place also bought an identical debit of $86.40. I was positive that it wasn’t a cash advance, and remember only signing a single $17.20 purchase.”
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“The next business day I contacted my bank, (Commonwealth) and explained the issue. I hinted that it could possibly be fraud so they would take the issue as seriously as possible. The woman on the customer service line stated that my dispute would take 6-8 weeks to resolve, and my disputed charge would be cleared from my statement in the meantime.”
“If you delay your dispute for too long, it will become increasingly difficult to pursue and win.” he states.

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There’s no such thing as a singular ‘best credit card’. That’s why Credit Card Finder has pinpointed several target lifestyles and financial habits and assigned a credit card most suited for it in our best credit cards section.Â