Credit cards: 5 traps to avoidReduce your bill by avoiding common mistakes

15 August 2014

Credit card on a mousetrap

Credit cards are useful, but they can hurt your finances if used improperly.

It's all too easy to get hit with a huge bill because you misunderstood the terms and conditions associated with your card.

Here, we list five of the most common mistakes which land credit card users with additional charges, and suggest how to avoid them. 

Go further: Which? credit comparison tables - compare the best deals on the market 

1. Forgetting when your 0% deal ends

A lengthy 0% interest deal on purchases or balance transfers can be an enticing sweetener that tempts customers to apply for a particular credit card.

The latest Which? credit card satisfaction survey indicates that just over a quarter of credit card users have taken out a card with a 0% balance-transfer offer, while one in five have chosen a card with a 0%-on-purchases deal. 

Yet, recent research from RBS suggests that around two thirds of credit card users fail to pay off their balance before this introductory offer ends and the APR shoots to a sky-high rate. 

We suggest setting a reminder of the deal's expiry date on your calendar or mobile phone, so that you can transfer your remaining balance before you are hit with high interest charges.

Which? comparison table: 0% purchases and balance transfer deals - compare the best deals on the market

2. Not paying off your monthly balance in full 

There are plenty of credit cards which reward you for spending, either through cashback deals or reward schemes.  

Our survey suggests that three in 10 credit card users possess a card linked to a retail reward scheme, while nearly a quarter own a card which offers cashback.  

But, the rewards earned from these schemes are likely to pale in comparison to the interest charged if you don't repay your balance in full every month. Previous Which? research has found that 44% of borrowers don’t do this. 

The key to getting the most out of cashback credit cards is to spend within your means so you can afford to pay off your monthly balance in full.

Which? comparison table: Best credit cards for cashback - all available deals compared  

3. Being careless with your credit card details

One in 10 credit card users have fallen victim to card fraud in the past two years, according to our research. 

Although there are measures in place to help you get your money back, it's always a good idea to take as much care as you can of your credit card details. 

Keep your credit cards in a wallet, purse or somewhere safe. Don't hand over credit card details to cold callers and only enter your credit card number on websites that you can be 100% sure are legitimate. 

Know your rights: My card has been lost or stolen and used to purchase goods - see our consumer rights guide

4. Using the wrong credit card abroad

Many credit cards add foreign loading fees on overseas spending, and most will charge you extra for making an ATM withdrawal outside the UK as well.  

Only 14% of our survey's respondents said their credit card was free to use abroad.

If you are planning to use plastic to spend while you are away, make sure it's on a credit card that waives fees on overseas spending. 

Which? comparison table: Best credit cards for overseas spending - all available deals compared

5. Keeping hold of unused credit cards

If you have an old credit card that you're not planning on using any more, it's best to ask your provider to cancel it. 

Lenders will look at the amount of credit you already have access to when assessing your creditworthiness, so failing to cancel your old card could you lead to you being turned down in future applications.

Go further: Your credit report explained - what your credit report contains and why

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