It’s simple to see why credit cards have supplanted cash as the preferred form of payment. Credit cards are helpful since they eliminate the need to carry cash around. However, if not handled properly, they can result in substantial debt. It is vital to be aware of frequent credit card traps and scams in order to avoid sliding into a cycle of debt. Let’s look into them:

TRAPS

• The minimum payment each month may seem like a good idea, but it won’t help you get much closer to paying off your credit card balance. It takes a lot longer to pay off debt and incur a lot more interest because minimum payments only cover a fraction of the interest accrued. If you want to get out of debt faster, you should pay down as much of your balance as you can each month.
• Getting cash from your credit card may seem like a convenient choice, but cash advances include extremely high interest rates and costs. Cash advances, in contrast to ordinary purchases, typically do not qualify for interest-free periods and interest accrues immediately. It’s a costly way to get cash because you may be charged withdrawal and transaction fees.
• Interest rates: credit cards may offer attractive APRs, but reading the tiny print is essential. The promotional interest rates on many credit cards eventually escalate. Over time, the interest from a seemingly low rate might add up to a significant amount due to the compounding effect of the APR.
• Tempting introductory rates and incentive schemes (such as cash back, miles, or points) are offered by several credit cards. There could be restrictions and requirements for these deals, though. There may be restrictions on the kind of purchases that qualify for cash back or the maximum amount that can be earned. The rewards program’s advantages may be outweighed by the possibility of interest rate hikes beyond the introductory period.
• In addition to interest, credit card companies can tack on a number of other costs, such as yearly fees, late payment fees, over-the-limit fees, card replacement fees, and fees for using ATMs in foreign countries. The cumulative effect of these charges on your credit card bills is significant.
• if you close your credit card account without checking your final statement. In the long run, ignoring these minor sums can hurt your credit score. Before you close an account, make sure you’ve paid off all remaining balances.

TRICKS

• One way to maximize your interest-free period is to make your charges either right before or right after your statement cycle concludes. If you make a purchase immediately following your statement’s closing date, you’ll have an additional 30 days before your payment is due, for a total of 55 days of interest-free credit.
• Make use of the card issuer’s mobile alerts to keep tabs on your credit card spending. Credit limitations, unexpected purchases, and upcoming payments are just some of the things that can be flagged by these notifications. Quickly identifying and fixing possible problems is greatly aided by mobile alerts.
• Credit card purchases are safer than cash or debit transactions. When compared to cash or debit cards, credit cards often have no liability for fraudulent charges. You can get more out of your purchases made with a credit card when you use a shopping site that accepts that card.
• Make sure you pay off your credit card debt in full before closing the account to avoid any interest charges that may remain after the account has been closed. If you want to be sure no one comes after you for money, you should get a letter from your card issuer verifying that the account has been canceled.

In order to use credit cards responsibly and avoid sliding into a cycle of debt, it is important to be aware of and avoid these common pitfalls.

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