Many friends who apply for a credit card for the first time, because they don’t know much about credit cards, often fall into two extremes. Otherwise, they use it without restraint, and all kinds of cash installment financial management services are accepted, or they use it as a savings card. Same, just swipe your card to spend. In fact, as long as you use credit cards well, they can be of great help to your life and financial management.

Mistake 1: Treat your credit card as an ATM and use it when you have no money. Some people have no money for a while, but they are in urgent need of money, so they use their credit card. It is still used as money anyway. The truth is correct, but if you develop a habit and fail to repay in time, you will have to pay a lot of penalty interest, and it will also cause credit stains.

Mistake 2: If you don’t have money to repay a credit card, pay off the minimum repayment amount first. Credit cards have a minimum repayment amount, but if you repay it, you are guaranteed not to be sued, and the interest will still have to be paid, and the interest will compound. It is very scary. Assuming a daily interest rate of 0.05%, the annual interest rate is equivalent to 18%, which is three times higher than an ordinary commercial loan with an expected annual interest rate of about 6%. Therefore, when using a credit card, you must try to repay it in full and on time.

Mistake 3: You have no cash on you. Credit card overdraft withdrawal can indeed be used to withdraw cash. However, most credit card cash withdrawals require interest payment on a daily basis, and the calculation starts from the first day when the cash is withdrawn. The interest rate is about 0.5%, and it is calculated as compound interest. At the same time, the cash withdrawal fee is about 1%. In this regard, financial planners remind you that if you don’t need it urgently, try not to use a credit card to withdraw cash. Keep a savings card with you so that you don’t waste money when withdrawing cash.

Mistake 4: Can’t remember the amount swiped by the card and just pay it off casually. If you don’t repay the loan in full, then by the next final repayment date, you need to pay all the interest on the loan last month. Part of the month has been paid back. Therefore, be sure to keep a clear record of the repayment amount. If you really can’t repay, check the bill and confirm the amount. Don’t pay the penalty interest in vain.

Mistake 5: Put money into a credit card and then take it out when you need cash. Some people are used to the convenience of swiping cards. When they have cash, they also deposit it into the credit card, which saves them having to carry a few cards, which they have to do sooner or later anyway. To repay the money, put it in first. However, when money is deposited into a credit card, not only is there no interest, but there is also a high handling fee when withdrawing cash. Therefore, it is more cost-effective to deposit and withdraw cash with a debit card. In short, while credit cards bring convenience to people, they also hide many traps. Financial planners remind everyone to recognize these misunderstandings about using credit cards, so that they can spend clearly and repay easily, and never fall into the credit card cycle. There is no way out of the pit of interest calculation.