Credit cards are the most preferred payment method in Singapore today. As the world moves toward becoming cashless societies, the usage of credit cards are constantly increasing. But not everybody is using their credit cards wisely. It is a known fact that credit cards charge one of the highest interest rates when compared to other lines of credit and if not used carefully, the repercussions could be catastrophic.
Here are 4 credit card mistakes that almost everyone makes
1. Not monitoring your account activity closely
It is true that the security measures on our credit cards today have been heightened to avoid misuse by fraudsters. But they watch the news too you know, and some of them always stay ahead of the game. Fraudsters today have become increasingly careful when stealing credit card information. Gone are the days when a fraudster simply “borrowed” your card to copy the magnetic stripe and duplicate it and empty your bank account.
They now start small and hide their transactions behind your legit ones. And not monitoring your account activity will only encourage them to continue abusing your card until it’s too late.
Tip: Sign-up for transaction and fraud alerts with your credit card company. Check your monthly statements carefully before you make your payment.
2. Not tracking your monthly expenses
Most of us do not track our expenses on a regular basis. It is easier to only check the outstanding balance and make the payment than go through the purchases we have made the previous month. This is one of the most common mistakes us credit cardholders tend to make. Tracking monthly expenses is beneficial on many levels.
Firstly, it gives you a complete view of your purchases and makes you aware of what categories dominate your monthly spending.
Secondly, it will keep you from becoming a victim of credit card fraud because you will know exactly what purchases were made by you.
Thirdly, knowing where you are making unnecessary purchases, you will be able to come up with a system to save more efficiently by cutting down your expenses and creating a budget for the future.
Tip: When you get your next credit card statement, be sure to take a look at your previous month’s spending and make a budget for the next month. This will allow you to manage your money more efficiently.
Additional reading: 5 Apps You Definitely Need to Get Your Finances Straight
3. Not utilising your rewards before its expiry
If you have a rewards credit card, cash back credit card or any other card that offers reward points, cash back or miles, be sure to keep track of the expiry date on them. If you are being rewarded on your purchases, it would be a waste not to make the best use of them.
Many of us love to accumulate our rewards and redeem it all in one go. It feels pretty awesome – a bit like hitting the jackpot!
For instance, if you own the DBS Woman’s Word MasterCard, you earn DBS points throughout the year on your purchases. The DBS points can be redeemed for miles but each conversion costs S$25, so we tend to keep it for a while.
However, your earned DBS points will expire after 1 year. Therefore, if you do not monitor your points expiry date, you might end up forfeiting all the points. What is the point of having a card that rewards you when you are not using it for the purpose it is meant for?
Tip: Go to your credit card account or monthly statement and check on the expiry of your points, cash rebates, or miles every now and then.
4. Not using your credit card for the intended purpose
If you are someone who travels frequently but owns a shopping credit card, then you are not making the best use of your card. A shopping credit card rewards your shopping escapades whereas a travel credit card will fetch you miles for your travel-related expenses.
So, if you use your shopping credit card for your travel purchases, you are not making the best use of what your credit card has to offer. You are instead making a loss. If you owned a travel credit card, your miles could have paid for your next flight ticket but instead, you are paying for it yourself because you are stuck with the wrong credit card.
Tip: Evaluate your monthly expenses and see what category most of your expenses fit into. Accordingly, apply for a credit card that offers the best rewards for purchases made under that category.
Additional reading: 5 of the Best Air Miles Credit Cards in Singapore
Don’t feel too sorry for yourself if you have made one or more of these mistakes. These are mistakes that many of us make with our credit cards. Use these tips to make your future credit card usage more efficient and maximize your savings.
Keep reading the BankBazaar blog for more tips and clever hacks on how to get the most out of your spending and credit cards.