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Avoid Credit Card Pitfalls with Advice from the Experts

Avoid Credit Card Pitfalls With Advice From The Experts

by / 2 Comments / Sep 06, 2015

Face it. Credit cards can be a dream or a nightmare, and just about anything in between. Information, restraint, and smart and responsible usage can make all the difference. To ensure you have all the knowledge you need to make your credit card experience a positive one, CREDIT CARD IDEAS references several authorities in the field of credit cards who weigh in on potential pitfalls to avoid, and offer guidance on how to do so.

Avoiding Pitfalls in General

Avoid These 7 Pitfalls When Choosing a Credit Card on the NEA Member Benefits site is an in-depth, no-nonsense approach to selecting the right credit card for the best reasons, and provides some great pointers for avoiding some potential hazards. You need to analyze rewards programs carefully, avoid the “shiny” offers with no real substance and pay attention to fees, interest rates and introductory offer periods.

Susan Johnston delivers some helpful tips on U.S. News Money with 8 Potential Pitfalls of Credit Cards. She offers some sage advice about avoiding marketing hype when selecting your card and resisting the lure of spending just to earn points and miles. Responsibility and sound financial choices are key, from educating yourself about your card by reading all the terms and conditions carefully and paying close attention to details on your credit card statement to paying more than the minimum on time and avoiding the urge to max out your cards.

Consumers on the other side of the pond who are new to credit cards can benefit from the information offered by Kate Palmer in Pitfalls every first-time credit card applicant should know. This guide opens your eyes to some negative aspects of applying for the first time, such as higher APRs, lower card limits and dings on your credit for application rejections, but offers possible solutions for tackling these problems.

Rewards Credit Cards

In Avoid the pitfalls of rewards credit cards, Miranda Marquit identifies some common dangers associated with rewards cards programs. Some consumers can get carried away with the idea of earning points, miles or cash back through credit card spending. So it’s important to approach your rewards with a spending plan that maximizes your earnings without carrying a balance.

Jeremy Simon contributes some additional pointers to Avoid rewards credit card pitfalls on CreditCards.com. He recommends that you consider the higher APRs and annuals fees that often accompany a rewards program, and warns you about term changes down the road by your card issuers that detract from your potential rewards.

Once you understand the basics, move on toin-depth guidance in Credit Card Rewards Guide: The Basics, Pitfalls & Tips to Maximize Earnings written by Cardhub CEO Odysseas Papadimitriou. This detailed guide provides an enlightening rewards card overview and informative FAQ about selecting the right card, and alerts you to common drawbacks associated with these programs. Learn the essentials on handling earning limits, rotating categories, rewards versatility, devaluation and expiration, and rewards-based overspending.

Student Credit Cards

The University of Alabama at Birmingham wants students to avoid The Pitfalls of Credit Cards that can set a young person on the wrong financial path for many years to com. UAB counsels caution and advises students to carefully review their credit card contract. Most importantly, be aware that the credit provided is not money, but rather, a loan.

If you’re a parent considering getting your child a credit card, don’t miss Pitfalls of getting your child a credit card. Ray Martin counsels you on the safeguards you can put in place to protect yourself, such as daily spending limits. Helping your child establish a good credit record through responsible credit card usage is a worthy goal.

IRS Payments

You may be aware that the U.S. government allows you to pay your federal income taxes by credit card online, over the phone or by way of an e-filing system, but are you familiar with the downsides? Though this payment method may sound pretty convenient to a lot of taxpayers, before you commit to this option, read Should You Pay Taxes With a Credit Card? by Gail Cunningham of National Foundation for Credit Counseling, to assess the pros and cons of this option. The transaction fee can be quite costly, and a big tax bill may put your credit card provider on alert, resulting in negative changes to your terms and conditions in the future. Cunningham further cautions the impact a big tax payment charge may have on your credit, your budget and your ability to pay.

Prepaid Debit/“Credit” Cards

While these are not credit cards, in the interest of offering comprehensive information for everyone, we are including these tips from Bankrate for the many, many consumers who choose to use prepaid debit cards in lieu of cash or credit to spend billions of dollars with U.S. merchants. If you’re one of these consumers, 5 prepaid debit card pitfalls to avoid is a valuable resource with some excellent advice:

  • Choose your prepaid card provider carefully. Many of these cards lack consumer protections, such as FDIC insurance.
  • Be wary of unregistered debit cards. If the card is stolen or lost, you’re out the funds loaded on it.
  • Look out for inactivity fees and overdraft fees.
  • Being a responsible prepaid debit card user won’t help your credit score since your usage is not reported. If you need to build or repair credit, a secured card is a better option.



Wait! There’s more drawbacks to consider. Our resident expert Harry Campbell warns you about some additional downsides to avoid with rewards credit cards:

This practice of “gaming” the rewards credit card system to earn additional rewards and cash back looks very enticing to many. But there are a number of negative consequences you need to watch out for. Campbell discusses 3 of them.

Beware the limited time offer. It’s important to evaluate these offers carefully to determine whether the additional rewards are worth the higher spending thresholds for qualification. Campbell also looks at time limits and methods and multiple card applications.

Do you have a Business Credit Card in your wallet, or are you in the market for one? Don’t miss The Best Credit Card Rates And The Pitfalls of Small Business Credit Cards by resident expert Sam Ashe-Edmunds.

  • Business credit cards differ in many ways from personal consumer cards. Learn about these important distinctions and how to protect both your business interests and your personal credit through responsible and knowledgeable use.

So now you’ve completed your research, and you have decided you want a credit card. But the problem is your credit history. To learn how to tackle that obstacle, get valuable insight from experts on fixing your credit in Building Credit: Advice from 10 Experts.

About the Author

Elizabeth Boyd is a financial writer and paralegal. She has written extensively for the financial and credit card market for several years and feels strongly about making consumers aware of their choices and rights.

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