Common Credit Card Charges That Can Lead To Debt

The types of payments put on plastic can have a huge impact on whether people end up with manageable balances or serious debt.

While carrying a balance on a credit card is one of the most common paths to credit card debt, there are also different charges that increase the risks and here we look at three common charges that can lead you in the wrong direction.

Recurring Payments On Credit Cards

Setting up recurring payments on a credit card means there is much less chance of dealing with overdrawn account fees when bills are due, but this convenient transaction setup is at the mercy of the merchants involved.

In some cases the automatic transfer process could continue even after they have agreed to cancel this option, so make sure everything is in order on credit card statements to help cut down the chances of losing money without knowing it.

Internet Purchases And Credit Cards

Fraud is one of the biggest risks for online shopping, and while most credit card providers will catch these thieves quickly, it is also good to register for extra security like Verified by Visa or MasterCard SecureCode.

Choosing a credit card provider that has its own security service, like ANZ’s Falcon 24/7 protection and Money Back Guarantee, will also complement any zero liability policies to make sure you are getting exactly what you want online.

Covering Split Restaurant Bills

Restaurant payment policies vary from location to location, but there are a number of places that will not be able to split the bill.

Fortunately this is less of a problem when you have a credit card, because you can discuss the costs as a group and charge it to a card without any immediate hassles.

Depending on the card it may even help you earn more reward points but the risk of debt actually lies in what happens afterwards.

Even when everyone has happily given you their share of the bill it is often easy to accidentally spend the cash or forget to transfer it over to the credit card account. If possible, try to transfer the money as soon as the charge is made, or set a reminder so that you do not end up with a balance that will add interest to the card.

The same rule can be applied to making group bookings or purchasing tickets on your card, where some people may not have the money upfront and leave your credit card account in disorder.

While a low interest card will help keep costs down, it is generally better to wait until you know you can afford the payment and will not have to worry about interest.

No matter what your credit card is used for, keeping an eye on the charges and account balance is the best way to make sure debt stays out of the picture.