Banks and credit card providers love customers who have a relaxed attitude towards credit cards as these are the customers who lenders tend to make the most money from. Relaxed customers tend not to take a lot of interest in the ins and outs of their credit cards and aren’t too fussed how much they use the credit card each month, or how much they pay off each month. These are the customers who tend to subsidize the customers who take advantage of the 0% deals that the banks offer.

Below, we have compiled a list of the top credit card ‘mistakes’ to ensure that you do not fall into the credit card trap and end up paying more charges on your credit card than you should.

Cash
Most credit card providers charge a transaction fee when you withdraw cash using your credit card. The fees vary but can be up to 3% of the amount you withdraw. Cash withdrawals also often attract immediate interest charges – standard purchases tend to have an interest free period of around 50 days in which the customer can pay the purchase price in full without paying interest. Some credit card providers also have higher APRs on cash withdrawals than on standard purchases.

Wherever possible, we advise you not to withdraw cash on your credit card as it may end up costing you a lot more than you may think.

Cheques
Many credit cards offer a cheque book alongside the credit card. Credit card cheques work in about the same way as cash – you may be charged interest straight away instead of having an interest-free grace period. Again, the APR for cheques is normally higher than standard purchases so you will end up paying more than if you just use the credit card itself for the purchase.

We advise that you avoid using cheques wherever possible and just use the credit card itself instead.

Overseas Use
Some credit card providers charge for use of credit cards when you are overseas. It is estimated that each year, customers spend £20 billion abroad, earning the providers a whopping £500 million in extra charges.

It is advisable to take your credit card abroad instead of your debit card however check the terms and conditions of your credit cards to ensure you take the one with the lowest fees associated with it.

Long-term borrowing
If you need to use your credit cards for long-term borrowing, you need to choose which credit cards you use carefully. If possible, use ones with 0% on balance transfers and/or purchases as this will ensure you don’t pay any interest in the introductory period.

If you are unable to use a 0% credit card, review the APRs for the cards – some of the highest interest cards are akin to going to a loan shark in terms of the interest you will be paying. Check whether a personal loan will be a better option as some loans will have much lower rates than credit cards and you may be better off in the long-run. If you are looking to reduce your debt, we suggest looking at our snowballing guide which will help you reduce and eliminate your debts in the shortest time possible.

Repayments
Credit card companies love customers who don’t pay off their entire credit card each month as they can charge interest on the unpaid balance. If you continue to just pay the minimum each month, you will end up paying interest on the interest – if you work out the difference between the total of the actual purchases versus what you actually pay back, it can sometimes be frighteningly high figure.

Wherever possible, you should pay back more than the minimum amount to reduce the amount of interest you pay. Even if you are unable to pay the full amount, even paying a little over the minimum repayment can yield huge savings in the long run.

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