Five common credit card mistakes to avoid

Get savvy with your credit card management and tell us your best credit card tip for a chance to win $50 cash back on your CommBank personal credit card.

Whether it’s your first time applying for a credit card or you’re looking to change to a different one, you need to have a good think about what you’re looking for and how you’ll make best use of your card. You may have experienced or heard stories of people getting a credit card on an impulse, and the traps and pitfalls that can go with it. So why not learn from their mistakes?

Credit cards have many great benefits for you as long as you manage the card, and not let the card manage you.

Stay within your means

Victoria Wildie, is an independent theatre producer, who has first-hand experience of the risks of not managing credit cards wisely, “In my profession you have times when money can be a bit scarce, so a credit card is really useful”.

“I learnt early on that you have to be careful to use the card within your means and make sure that you pay it off every month. It’s not hard to do, but you do have to think about what you can afford before choosing your credit card.”

Ask an expert

Ingrid Just, is spokesperson for Consumer Advocacy Group, Choice. “The important thing is for consumer is to do their homework. A little bit of time spent on this can save a lot of problems. Our research has identified common mistakes that consumers make when using credit cards that could easily be avoided.”

The top 5 things to avoid

Here are 5 things you shouldn’t do when choosing your credit card.

1. Choosing the wrong kind of card

Solution: Inform your choice

Make sure you’re not choosing a card for the wrong reasons. Know what fits within your means and lifestyle. Understand your spending habits and work out a monthly spend that you can manage.

“You really need think about your financial habits and how much you will use a credit card,” says Just, “For example; if you’re a high spender then a rewards card might work for you. If you’re a low spender, then a low interest card might be the way to go. “

We have a simple 4-step selector tool that will help you find the right credit card.

2. Not knowing enough about the fees and charges

Solution: Read the small print

It’s essential to get down with the detail. Just agrees, “Dismissing fees and charges is the biggest mistake that consumers make with credit.”

The fine print is where you’ll find the important information about the benefits and penalties that go with your credit card. Knowing about things like balance transfers, the interest rates after the honeymoon period, and the interest free period, all help you become more aware of how you will be able to get the most out of your credit card. A question of interest is your guide to using your credit card wisely.

3. Making late payments

Solution: Pay by the due date

This is how you avoid fees and charges like interest and late payment penalties. As Victoria Wildie has learnt, “I make my payments 3 days before they are due. That way I know that that my payments will be on time and I’m not at risk of incurring any fees and charges.”

We have a range of convenient ways to help you meet your payments: You can use Autopay to help avoid late fees, or get more flexibility through regular instalments . We can even set up SMS or email reminders 5 days before your payment is due to make sure you never forget.

4. Missing out on the benefits

Solution: Understand the bells and whistles

“You need to look behind each card to really understand what it offers, and the conditions that go with that card”, says Ingrid Just of Choice.

There are cards, for example, that offer complimentary travel insurance* or points redemption at Flight Centres as part of their value, such as the CommBank Gold, Platinum and Diamond Awards card. Some offer Qantas Frequent Flyer points which may have flight blackout periods, a detail often overlooked by consumers. That’s not the case at CommBank. Our partnership with market leader Flight Centre means you can redeem any seat, anytime, anywhere.

5. Being liable for charges you haven’t made

Solution: Report your card if lost or stolen

Another common mistake is to put off reporting your card as lost or stolen in the hope that you will find it again, and so avoid the time consuming process of having your card re-issued. The danger is that you are still liable for all charges on the card, and if it has been stolen, someone could be profiting at your expense

Our solution is simple: If you lose your card and let us know, we can offer a temporary stop, meaning if you find it again, you won’t need to apply for a replacement card.

Learning from the experiences of others will put you in the driving seat to ensure that you pick the credit card that’s right for you.

Anonymous

Not just comment on the blog?
Anonymous

I was silly and got credit cards simply because they were offered to me! I ended up $5000 in debt (with nothing to show) and struggled to keep on top of it. I ended up paying a little more than the minimum on the one with the highest interest and keeping my repayments the same until I had it payed off, then once that was paid I have put that amount plus what I was paying on my other credit card all into the one card. That was 12 months ago and I am about to pay off my second card! So ill soon be debt free! YAY!
- Anonymous
  
  That’s a great story. One I am sure that resonates with many of us. Good on you for mastering your credit card.
http://www.facebook.com/profile.php?id=585349187 Hayley Phillips

I use my cc for everything (that is budgeted) and do a lump sum payment once a month to pay it off. That way i am utilising the rewards I get along with my cc.
Kris Penney

Paying your credit card off in full every month to avoid the interest charges! My salary goes into another account which gains interest, which in turn goes towards the annual fee i have to pay for the credit card. Best way i can think of to reduce the amount i have to pay.
Guest

I am with CBA for many years and I need credit card to help balance in flow with more room for elbows but I was declined !
Albino Marlin

once you have payed off your credit card to a zero balance tip of the day: cut it in half an throw it iin the bin thats where mines going infact cut it in half now that way it cant keep eating your hard earned money away
Albino Marlin

TIP OF THE YEAR ; Buy one pair of decent sharp scissors on credit then cut the card into a million bits an throw it into the recycle bin. Keep scissors for future mistakes.
http://profile.yahoo.com/A7KC3GXIUKQDYAP26GYB4ZUVLU Sean

$50 cash back? seriously? not $500, not even $100 but $50! that doesn’t even cover the annual fee on some cards!
Anonymous

If you need a credit card for emergencies but tend to use them compulsively, stick it in the freezer in tupperware full of water so it freezes overnight. You can access it if you need it but you can’t spend without having time to consider whether you really need to.
Anonymous

Hi Elle, that’s a very unorthodox approach to saving, and whilst we appreciate the originality and logic behind your tactic, we certainly wouldn’t advise our customers to let their credit cards get wet. Moisture can damage our cards and make them unreadable in credit card terminals. Ten points for inventiveness though!
http://www.buraq-technologies.com/ ambreen11

Its nice post to read. Very true saying that learning from the experiences of others will put you in the driving seat to ensure that you pick the credit card that’s right for you. Thanks
CommonwealthBank

Thanks for sharing these very worthy tips, Blake. All the best.
CommonwealthBank

Hi Rivo, any transactions that are completed are required to be processed by the merchant and their financial institution until batch processing is completed throughout the day. Cash payments can be simpler forms of payment but it depends on the type of transaction being made. Please let us know if you have any further questions.
CommonwealthBank

Hi Peter, we’re sorry to hear you’re not happy with your current bank’s services. Please give us a call on 13 2221 (24/7) where we’ll be able to talk you through our offering.
Akbar Ali

With this so called “$50 Cash back” promotion you will get only $2 value when you go for a low rate credit card! This is due to the annual fee of $48 charged for eligible Commbank customers ($78 otherwise). So what exactly is the incentive to get a credit card at Commbank?

Five common credit card mistakes to avoid | Blog.CommBank

17th May 2012