There are plenty of options available in the credit card market. Sometimes, a wealth of options could easily lead one to make mistakes. Some of these mistakes in case of credit cards could prove extremely expensive as well. A lot of customers don`t really do the full research required to choose the right credit card. Here are the most common mistakes made while choosing credit cards.
Some rewards are indeed, rewarding. Others are just a marketing strategy which tempt the card holders into greater expenses and drag them into debt. Rewards like cash back, offer a huge benefit. But card holders also go for credit cards which offer rewards in the form of milestone discounts and conditional opening bonuses, which lead them into spending more than what is required. Choosing cards with such rewards could prove detrimental to your financial health in the long term.
This is one of the biggest mistakes that one can make while choosing a credit card. A lot of balance transfer credit cards come with an introductory balance transfer offer, where the APR is 0% or is very low, hovering around 2 - 3 % during the first few months. A lot of card holders are excited about this offer and opt for it. However, it would be a big mistake to ignore the final APR of the credit card, which will come into effect after the introductory period. Sometimes, this could be exceptionally high and could lead to losing more money on interests than you could have saved through the introductory offer. Moreover, card holders have to be calculative about whether they can pay off their outstanding debts before the final APR comes into effect after the introductory period.
Some card holders do the vital mistake of not reading fine print. It is a huge blunder given that most of the important details of the credit card are listed out in the fine print by card issuers. For example, a credit card could have the hidden condition that the 0% introductory rate will be withdrawn even if the card holder makes one late payment. The rewards could have caps and expiration dates too. Not understanding the fine print could be a great mistake that should be avoided while choosing credit cards. It is imperative that one understands the terms and conditions related to interest rates, fees and rewards offered by a credit card.