TOP 5 WORST CREDIT CARD MISTAKES

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Don't succumb to temptation - Cate Williams, vice president of financial literacy for Money Management International in Chicago.

This is a collection of top five worst common card mistakes which one should be avoiding.


1. Applying for too many

"Ask yourself," says Williams, "'Do I need another credit card?' Probably 95 percent of us don't need another one to keep in the sock drawer or in the little metal box in the kitchen."

Howard S. Dvorkin, founder and president of Consolidated Credit Counseling Services, a nonprofit debt management company in Fort Lauderdale, Fla., agrees. "The worst mistake is that people don't know when to stop. Too many credit cards is not a good thing."

Even if the cards have zero balances, multiple open accounts could cause a lender to question what could happen if the account holder gives in to temptation and maxes out on all that plastic.

2. Making minimum payments

"Credit Cards are not a form of supplemental income," says Dvorkin. "They're for convenience, and should be paid off at the end of every month. Paying the minimum is not going to get you anywhere. It's going to get you in trouble, that's where it's going to get you."

And it is going to get you into trouble for a long, long time. "People don't realize how difficult it is to pay off loans at a high rate," says Wishnatsky. "You're going to be paying it for your next three lifetimes."

3. Late payment of bills

Though late payment of bills may sound better than not paying at all, it is still not that much. As a consequence, you will not just be facing the late-payment charge, which could be higher than your minimum payment, your tardiness will show up on your credit report, making it harder to get better terms for future loans and accounts.

Check your account statement for the due date and make sure you send your check in plenty of time. But the date alone isn't enough, says Liberty Financial's Schroeder. Some companies have cut-off times. If your check arrives on the 22nd as required, but in the afternoon mail, your payment is counted as late because your account terms called for payment by 9a.m. that day.

If you've set up an automatic payment via your bank, make sure the time and date are taken into account, says Schroeder. And find out your bank's payment policy when the due date falls on a weekend or holiday.

4. Ignoring credit card monthly statements

You must read over your statements, checking to see if you were properly billed. Errors do happen, and so does fraud. Keep records of all your purchases as much as possible to confirm that your statements are correct. Also check your interest rate to see if it has changed, as well as your credit limit. Going over your credit limit can cost you dearly in fees.

5. Buying thins you don't need 

"Go over your credit card bills every month and you'll be amazed at the number of items that, upon your reflection, you could have done without," says Wishnatsky. "It's surprising how many purchases we make that we think are needs, but are impulse buys."

The Phoenix Financial Planner tells his clients who are considering a significant purchase to wait 48 hours, if at all possible. "If you still want it, wait for another 48 hours," Wishnatsky says. "Then if you have to get it, then get it."

Also, use your statements to help you create budget. Wishnatsky realizes many people cringe at the "B" word, but he says control of your spending and your credit card usage doesn't have to be a way to deprive yourself. Instead it can be a way to make things happen in financially positive ways.

Once you get control, even to a degree, it frees you from this constant money worry," says Wishnatsky. "You might find there are things that you can actually end up having if you just have a plan, if you get your financial desires in tune with your financial resources."

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