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Ciara O

Top 10 credit card pitfalls to avoid


Credit cards can be a very useful payment tool when used properly. However, not doing so could prove costly. 

woman with credit card

Here are the main points to be wary of.

1. Overseas charges

While credit cards can be a safety net when you’re abroad, certain cards can end up costing a small fortune.

Overseas usage fees can be very expensive. If you plan on using a card abroad, make sure to get a specialist travel credit card to avoid any nasty surprises.

2. The everlasting debt

Bridesmaids gif

Where possible, try to make more than just the minimum payment set by your lender each month. Sticking to the minimum repayment could take years to pay off.

In some cases the debt even grows! Try our credit card debt calculator to see how much you could save by paying off a little extra each month.

3. 0% interest rate revoked

Interest-free credit cards are very attractive. If you’re lucky enough to be approved for one, then you’ll need to stick to the T&Cs in order to hold onto that rate.

Typically, each card company will require at least the minimum repayment each month.

If you don’t do this, the company can remove the interest-free period and start charging their standard rate.

4. Gift cards

Be very careful when buying gift cards with your credit card – they can end up costing more than you bargained for.

These are classed the same as cash withdrawals, therefore come with the same upfront fees and interest.

Other transactions that are seen as “cash advances” include cashback at the till, and gambling.

5. Hole in wall leads to hole in wallet

Parrot and a cash machine

Avoid the temptation to use your credit card at the ATM.

The interest charged for withdrawing cash is terribly high, typically around 25–30%.

You’re charged from day one, with no interest-free days, and you usually have to pay an up-front fee on top – ouch!

6. Are you getting the headline rate?

Those of us fortunate enough to be accepted for a card and get the representative APR still pay around 20%, on average.

That’s because the average APR after a headline rate expires is around 20%. This will cost you about £1,000 in interest if you pay off a £5,000 debt in equal instalments over two years.

7. Credit score 

Having a credit card can greatly improve your credit score, as long as you use it correctly.

Proving to a credit lender that you’re reliable with repayments will increase your chances of obtaining loans and mortgages in future.

But it works both ways: if your payments are late on a regular basis, this can affect your score in a negative way. 

8. Costly extras

Hands counting money

Watch out for added extras such as insurance to protect payments or protection against fraud.

These products can be overpriced, and you more than likely don’t need them because of the protection you get for fraud under existing laws.

9. Choosing the right card

When applying for a credit card, it’s vital to get a card that suits your needs. If you get the wrong card, you could end up with annual fees for benefits you don’t necessarily need or want.

Having said that, if you do choose the card that fits your situation, you can reap the benefits. 

Check out our article to help you decide which card is best suited to you.

10. Losing your home from card debt

It’s easier than you think to spiral into debt if you don’t keep control of your credit card.

If you fail to make a payment arrangement with your lender for your arrears, the lender can get a court order securing the debt against your home. Although this is rare.

If you find yourself with escalating debts, there are always ways to fix this. Read our article on ways to clear your debt for more useful tips.


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