subject: Credit Card Mistakes New Card Holders Tend to Make [print this page] Credit Card Mistakes New Card Holders Tend to Make
Do you remember the first time you got your own credit card? What was the first thing you bought with it?
Getting your first credit card is indeed quite exciting, especially if you love to shop. However, the excitement soon turns sour as soon as new card holders receive their credit card statement and see an unbelievable huge balance. When this happens, the new card holder will then realise that they have just committed their first mistake. The mistake is not in signing up for a new card, but in using their credit card excessively.
A one time excessive use of your credit card may not be a big deal since your savings might be enough to pay off the entire balance at once, or at least a large portion of the balance. However, if the lesson is not learned the first time it happens, the balance on the credit card starts to bloat to the point that paying more than the minimum becomes impossible. The new card holder then commits the second mistake, which is to pay only the required minimum payment each month. When this happens the balance on the card starts to be unmanageable, so that the excited card holders then turn anxious after realising that they are already in credit card debt.
Instead of finding a sound way to pay off the more than the required minimum each month, a lot of card holders then commit another mistake yet again. They go online, compare credit cards, apply for the best credit card and use the credit of the new card to pay off their first card. This strategy could actually work if they applied for a credit car with significantly lower interest rates, since they will be paying lower interest on the new card. However, unless they transfer the balance from the old credit card, they will be left with two credit card accounts that they need to manage. Chances are that if you cannot manage just one account, then having two will be even more confusing.
The problem would stop there if the new card holder learns how to apply credit card debt management principles. However, instead of just slowly paying off the credit card debt and stopping making unwise credit card purchases, a lot of credit card holders fall into the habit of finding a way to pay off just enough of the balance in order to use it again. This means that the new credit card holders end up in a cycle of debt and adds to the growing number of people in serious credit card debt.
