It is not only high balances on credit cards that can cost us dear. Even organised money fighters can get caught out by transactions made using their ‘stand-by’ credit card if they don’t follow a few rules…
A second card is a good idea. There are always occasions when your first card can’t be used. It isn’t just that you might have maxed it out – see the example below. Money fighters always have a back up plan.
But while the direct debit (DD) for our usual card choice is paid as normal the other card payment can so easily be forgotten. For example, as it’s a standby card you haven’t got a DD set up. That can cost dearly.
So when the statement comes in you simply forget that the amount won’t be deducted from your bank account automatically, or you simply forget or don’t give yourself enough time to make the payment manually. This sort of oversight is even more likely to happen these days as increasing numbers of credit card providers encourage as (or slily move us) onto paperless billing.
Take this example… a MFC follower got a phone call in December from his usual credit card’s security department telling him of some strange transactions. They had nothing to do with him so a replacement card was issued and arrived a week later.
In the meantime he used is standby card to pay for something costing £6.70. His standby card is with the same credit card company as his usual card and he didn’t think anywhere more about it. The £6.70 was on a paper statement, but he completely forgot that this particular card wasn’t covered by a DD. A £5 minimum payment was needed and missed, incurring a £12 penalty and about £1 interest. Plus a black mark on his credit history.
The financial implications alone worked out at a 200% ‘charge’ on one tiny, overlooked transaction.
It could happen to anyone. Be careful out there. Here’s how money fighters glove up using a few basic rules to prevent such a thing happening:
- Opt for paper statements even when you have direct debits in place.
- Make sure you know when payments are due – and make a note in your dairy for three or four days before (payment dates can vary).
- Set up text reminders with your card issuer if this facility is available.