Credit Card Convenience Checks

Category: Finance, Credit.

No matter how convenient credit cards are- and they re almost obligatory for modern life- there s no denying that they can land the unwary card- holder in a whole world of trouble if not used carefully.

Late Payments. Here we present the seven deadly sins of credit card use. The number one rule of using credit cards is to pay your statement on time. Minimum Payments. Not only do late payments cause damage to your credit rating, they also cost you money- both in the form of the late payment fee, but also in the form of a hike in your interest rate for repeat offenders. Even if you keep to a good repayment schedule and always pay on time, only paying the minimum amount required on your statement is a major mistake that most of us make- not least because we re actively encouraged to do just that by setting up automated payments such as direct debits.

Sticking to the minimum amounts will all but ensure that you stay permanently in debt, and will cost you dearly in overall interest charges. The problem is, with minimum payment levels set at only a few percent, nearly all of what you pay is swallowed up in interest charges leaving your debt virtually untouched. Cash Advances and Withdrawals. Don t do it, except in a real emergency when you really need cash and have no other way of getting it. Most credit cards now offer the facility to withdraw cash from a huge number of ATMs worldwide. Not only will you be charged a fee, the interest rate charged is usually much higher than your normal rate, and because more expensive debt is usually the last to be cleared, you ll be charged this high rate each and every month while you re carrying a balance.

These are a bad idea as they suffer from the same drawbacks as cash withdrawals- i. e. high interest rates. Credit Card Convenience Checks. Even if your card is one of the few still to offer this facility , avoid it- there s little benefit in using a check, and plenty of cost! Balance transfer deals can save you a fortune in interest on your debt if you handle them correctly. Spending on Balance Transfer Cards. The problem is, many people fail to get the full rewards by using the same card for balance transfers and purchases. Use separate cards for spending and balance transfers.

Because of the way most cards allocate the payments you make, your purchase debt will never be lessened until the balance transfer is fully repaid, and so will attract interest without any of it being repaid. Impulse Purchases. As you re not actually parting with any cash, using a card doesn t feel as expensive as ordinary purchases, when in fact it s much more expensive! One of the major causes of problem credit card debt is the casual use of cards to fund impulse purchases. Think carefully before you buy whether or not your purchase will seem as good an idea when your next statement drops on to your doormat. While using your card as much as possible s a good idea if you re benefiting from a reward or cash back scheme, you should only do this if you pay off your balance in full every month. Paying for Essentials.

Using your card to pay for essentials such as food and energy bills, and letting your debt build up unchecked, is a sure sign that you re living beyond your means and need to have a hard look at your budget.