The most common trap inexperienced credit cardholders fall into is the conviction that they can charge anything to the card without any consequences. Yes, you can charge anything to the card, but should you? Here is a list of things you should not put on your card, and some things that you simply shouldn’t do with your card.
If you are in debt or have fallen short on your living expenses, do not use your credit card. Do not charge everyday purchases to it either. Using the card to cover debt creates a circle of debt that you cannot get out of. Do not buy expensive luxury items with it, because the interest can reach 25 percent in some cases. Also, do not charge something to your card that you could have saved up for. You should have learned at least a little financial responsibility in all these years!
Do not let your provider automatically increase your credit or ask for one yourself if your income has not increased as well. Do not maintain multiple credit card accounts. And do not put your salary into your credit card – opt for a bank account with a good package instead. If you can’t afford to go to college, do not charge tuition to your card – get a student loan.
In some respects, it would be wise to enforce an age limit when issuing credit cards and refuse to issue one to anyone under 30. Young people fall into the trap, find themselves in debt, see debt counselors, and pay more and more fees while remaining in debt. Young people want everything quick (yesterday, if possible). Then again, if everyone who had a credit card used it responsibly, the companies would never make a profit.
In fact, if you use your card for certain purchases, your credit card company might think you are worried about your job or financial future. Don’t charge anything to your card at Wal-Mart or a 99-cent store. Some have accused American Express of cutting credit because of shopping at Wal-Mart.
A lot of people (erroneously) believe that if they are paying off the card, there should not be a problem. Yes, but it is not always enough to cover just the minimum amount. This extends the credit term, and you are charged more interest in the coming months. Pay off the card in full every month. It is that simple. If you can’t, go for a card with a low interest rate or none at all. Things you can put on the card are hotel room expenses and utility bills as well as incidental expenses. Do not charge expensive purchases just to get rebates – these practices work only for shopaholics. Do not charge medical expenses instead of getting an insurance package. If you have an accident, the medical bill comes in, and you end up regretting that you didn’t get the good old insurance. Finally, never use credit when you have cash.
The following people started out as normal senior executives with corporate cards, whose habits got out of hand. Betsy Collins put her child’s entire college education on her corporate card. She was tried for embezzlement and sent to jail. Adrienne Martin spent $35,000 on appliances, PCs, and home theater equipment and was finally caught after charging an LCD television and pawning it at a local store. Finally, Sue Sachdeva spent $1.35 million on fancy clothes for charity events, as she often participated in such. One wonders why she didn’t just give the money to charity.
Do not try this at home!
Comments on this entry are closed.