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Adam Jolley

Seven 'deadly' credit card sins to avoid


Credit cards, if handled irresponsibly, can end up costing consumers dear. To avoid the potential pitfalls, here are seven sins you would do well to steer clear of.

Credit card sin

1. Paying late

Missing your monthly payment can cost you around £12 in late fees every time. However, a penalty charge could be the least of your worries.

The 0 per cent introductory rates on many cards are reliant on you making at least the minimum payments.

So if you do miss one, the rates may get hiked up – putting you out of pocket by more than just £12.

2. Withdrawing cash

Another major error is taking out money from a cash machine - you could face an upfront fee for a cash advance and incur a high interest rate on top of that.

Withdrawing cash on your credit card could also adversely affect your credit rating, so it is best to avoid this if at all possible.

3. Using the wrong card for the wrong occasion

A shopping spree on a balance transfer credit card is one of the main mistakes people make, as interest rates charged on purchases can be high.

Another is using the wrong credit card abroad, as providers typically charge consumers commission upwards of 2.5 per cent on each foreign transaction.

This can add up to a significant sum over the course of a holiday.

In fact, a poll by online-travel agent found Britons abroad face a collective bill of more than £260 million each year for taking cash out on their credit and debit cards.

There are some credit cards you can use overseas without incurring hefty charges, so you may want to consider one of these travel cards to use on holiday.

4. Making only the minimum payment

This not only means you take longer to pay off your balance, but increases the amount you pay through interest.

By upping your credit card payments you can reduce your balance more quickly and also more cheaply.

5. Co-signing for a credit card

You are taking a risk if you get a secondary credit card for another person as you are liable for all the charges incurred on that card.

When it comes to children being granted access to your hard-earned funds you will probably want to monitor their card use closely.

If you do not trust their spending habits, it is probably best avoiding this altogether.

6. Complacency

Staying with your current card provider could be costly if there are better deals available.

Factors such as credit rating and rewards schemes change, so even if you were happy with your card two or three years ago there may be a better deal now.

Taking advantage of the best balance transfer deals can be a good way to save some money.

7. Cancelling your cards

It may seem like a good idea to cut up your credit cards to avoid the temptation to spend on them. However, if you actually cancel all of your cards this could end up adversely affecting your credit score.

A better idea might be to pay off your cards and simply keep the account open.

Despite the potential pitfalls, if used sensibly, credit cards can be a helpful tool, building your credit history, adding a layer of protection on purchases, and offering you additional rewards and perks such as air miles.

Nerys Lewis, head of credit cards at, says: "Before you apply for a new credit card make sure you are clear about what the card will be used for and have a plan in place for paying back any debt.

"By choosing wisely and using a card as it’s intended you can make your credit card work for you - not the other way around."


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