TRAP #1 – Only paying the minimum repayment
Credit card minimum repayments are typically around the 2% mark and if you stick to only paying this amount off each month, you could risk adding a considerable amount of interest to your existing debt. The result? It could take you years to pay off your credit card!
Where possible, pay more than the minimum repayment required on your credit card, every little bit helps. If it’s a personal loan or home loan, check if there are any restrictions or penalties on making early repayments.
TRAP #2 – Letting the little things add up
Those little luxuries add up and if you don’t keep an eye on them, you might be hurting those savings goals. We love our morning coffees and after-work dinners as much as everyone else, but a few little changes to old habits can make more of a difference than you think. Whether it’s skipping one coffee a week for an office-brewed alternative, taking lunch to work instead of buying it or walking the 15 minutes instead of taking an Uber, the extra dollars can come in handy down the track.
TRAP #3 – Not doing your homework on introductory rates
A number of credit cards offer “intro rate” deals that can last anywhere from a few months to 18 months, to make them more appealing. Make sure that you understand when your introductory rate ends and what the new rate (i.e. the revert rate) will be, before you take out any product.
TRAP #4 – Forgetting to check your credit rating regularly
Life can get busy and checking your credit score and report summary may not be at the top of your list, but avoid any unhappy surprises by tracking your credit score over time, learning how to protect it and keeping an eye out for fraudulent entries. Bonus fact: you can do this all for free at Credit Savvy!